The process by which price and output are determined in the real world is strongly affected by the structure of the market. A market consists of all the actual and potential buyers and sellers of a particular product. Market structure refers to the competitive environment in which the buyers and sellers of the product operate. Four different types of market structure are usually identified. These are perfect competition one extreme, pure monopoly at the opposite extreme, and monopolistic competition and oligopoly in between.

1. Under what conditions can we be sure that perfect competition leads to a more efficient use of societys resources than monopoly? How prevalent are these conditions in the real world?