Market structures / competitive market

Economists assume that there are a number of different buyers and sellers in the marketplace. This means that we have competition in the market which allows price to change in response to changes in supply and demand. Furthermore, for almost every product, there are substitutes.

So if one product becomes too expensive, a buyer can choose a cheaper substitute instead. In a market with many buyers and sellers, both the consumer and the supplier have equal ability to influence price. And in some industries, there are no substitutes, and there is no competition.