Describe what is happening

Unit: Market Structures What will we learn today? 12.2.7 Analyze how domestic and international competition in a market economy affect goods and services produced and the quality, quantity, and price of those products. Take out Spiral Unit: Market Structures Think about the last purchases you made, what contributed for you deciding to buy that item? Is there truth to advertisement?

Assignment 12: 7.3 Monopolistic Competition and Oligopoly Notes

Section 3: Monopolistic Competition and Oligopoly So far we learned about two extremes: perfect competition and monopoly. Very few things actually fall into those categories. Instead, most fall into two additional categories economists call monopolistic competition and oligopoly.

I. Monopolistic Competition In monopolistic competition, many companies compete in a open market to sell products that are similar but not identical. Examples: jeans, bread (loaf), shoes, drinks, etc.

A. Four Conditions of Monopolistic Competition 1. Many firms: many companies selling products 2. Few barriers to entry: anyone can sell products without much trouble getting started 3. Slight control over price: consumers are willing to pay more for some brands, but not too much more. 4. Differentiated products: even though products are similar, they have differences (Zune vs. iPod) (differentiation: making a product different from other similar products)

B. Nonprice Competition Firms try to compete with nonprice competition, or attracting customers through style, service, or location, but not a lower price. Some examples: 1. Physical Characteristics: size, color, shape, texture, taste Example: A pen is a stick with ink that writes, but we pay more for style or how it writes.

2. Location: Location is very important to a business's success. 3. Service level: restaurants: expensive, fast food: cheap. Both offer food. 4. Advertising, image, or status: Customers are willing to pay more for brand name clothes with logos

Section 3 - Oligopoly $ An oligopoly is a market dominated by two or four firms producing 70%-80% of the output. Example: Pepsi, Coke A. Barriers to Entry It can be tough to go up against these companies. Who would want to create a new soft drink to challenge Pepsi or Coke?

B. Cooperation and Collusion Price war: a series of competitive price cuts that lower the market price below the cost of production example: PS3 lowers price, so does Xbox and Nintendo Collusion: when businesses get together and set prices, divide the market, or limit production (illegal) Price fixing: an agreement among firms to charge one price for the same good (illegal) Cartel: a formal organization of producers that agree to coordinate prices and production (illegal in the US)

It’s a Mad Mad Mad World

Assignment : pg. 171, 1 – 7 (skip #6)

Assignment : Advertising Brainwashing Write down as many advertising slogans as you can think of. Person who can write the most gets extra credit.

ADVERTISING: What is it? Like A Rock

ADVERTISING Like A Rock

ADVERTISING Maybe She’s Born With It

ADVERTISING Maybe She’s Born With It

ADVERTISING I’m Loving it!

ADVERTISING I’m Loving it!

ADVERTISING Just Do It!

ADVERTISING Just Do It!

ADVERTISING Can You Hear Me Now? Good!

ADVERTISING Can You Hear Me Now? Good!

ADVERTISING Ch Ch Ch Charming!

ADVERTISING Ch Ch Ch Charming!

ADVERTISING If It Doesn’t Get All Over the Place, It Doesn’t Belong In Your Face

ADVERTISING If It Doesn’t Get All Over the Place, It Doesn’t Belong In Your Face

ADVERTISING Have It Your Way!

ADVERTISING Have It Your Way!

ADVERTISING Eat Fresh

ADVERTISING Eat Fresh

ADVERTISING Is It in You?

ADVERTISING Is It in You?

ADVERTISING Think Outside the Bun

ADVERTISING Think Outside the Bun

ADVERTISING Built _____ Tough

ADVERTISING Built Ford Tough

The Power of Ads This project is worth 50 points, so be sure to do a good job. YOUR TURN! You will get into groups of 2-3 (pick people you are comfortable working with, possibly after school) In groups, you will choose a product to sell. You will apply non price competition to encourage people to buy your product. For this product you must create: 1. A slogan- short catchy saying 2. A advertisement- (hand drawn or computer generated) poster with slogan and picture that includes advertising technique, message and target audience. 3. A commercial- short skit that includes advertising technique, message and target audience. - All group members must participate in commercial. - You must use props and scripts. - Commercial will be performed in front of class. (You can record on your own, but must be in a format that can be shown to class.)

ADVERTISMENT Project Advertisement/Poster – 15 points Leave little to no white space Should be very visually appealing (think like a magazine advertisement) Use your slogan! Commercial/Skit – 25 points Everyone participates (camera man can sit it out) Can be anywhere from 45 seconds to 2:00 long Use props. Dress up. Be professional. Use a script. Don’t improvise. Slogan – 10 points Short, catchy.

Is Wal-Mart Good for America? Discuss 40

Is Wal-Mart Good For America? Before we watch: Outsourcing is when a business obtains services or products used in manufacturing, such as parts for a television set, from an outside (often overseas) supplier or manufacturer in order to cut costs. Offshore Companies conduct most of their business outside of the country in which they are incorporated. These companies are also known as non-resident companies. Push Production is when manufacturers of products decide what to produce, how much to produce and the price of the product. Pull Production is when retailers determine what the manufacturer will produce, how much to produce and the price of the product. 41

What did you notice at the Wal-Mart shareholders meeting What did you notice at the Wal-Mart shareholders meeting? Do you think this is different from other shareholders' meetings? If yes, in what ways? How is Wal-Mart able to keep track of its inventory? Why is this important? List the effects this has on producers. Trace the decline of Rubbermaid from 1994 to 2004. What factors most contributed to this decline? What is an opening price point? How does it influence sales? Wal-Mart started a campaign encouraging people to buy products that were made in America. What influence did this have on Wal-Mart's buying practices? Be specific! In 1994, President Clinton said that new trade agreements would create a market for American products in China. What happened to the United States companies after opening trade with China? Include statistics, companies and places. List the arguments in favor of outsourcing and those that are against it. Compare the situation at Five Rivers Electronics and the Thomson Plant. What caused problems and what was the result for each? 42