1. <============================================  Perfect Competition Monopoly OLIGOPOLY Monopolistic Competition How close to Adam Smith’s World? Pure Free Market No Competition U.S. Economy

2. Oligopoly Examples Car makers Steel industry Aircraft manufacturing Oil industry Airlines Tobacco industry Beer industry Soda industry Home Improvement Music recording industry Textbook industry Wireless communications industry Aerospace industry

3. N0, because of Economies of Scale. Economic Activity is often MORE EFFICIENT when done on a LARGE SCALE Can you have Perfect Competition in: Automobile Production Airliner Production

4. Economies of Scale Definition: factors that cause a producer’s average cost per unit to fall as output rises

5. Economies of Scale Example 1 unit of energy 100 units of energy 1000 units of energy 10,000 units of energy 100,000 units of energy 1,000,000 units of energy Cost of building power plant (fixed cost) $10,000,000 Cost per unit of energy produced $10,000,000 $100,000 $10,000 $1000 $100 $10