1. Do Now
Discuss with a partner….
“How many companies make cereal?”

2. Market Structures
perfect to imperfect

4. Market Organization Perfect Competition Monopolistic Competition
Oligopoly
Monopoly
All imperfect

6. Market Organization Perfect Competition Monopolistic Competition
Oligopoly
Monopoly

7. Perfect Competition
Perfect Competition – is a form of market organization where many small firms produce the same product.
Leads to efficient production
Leads to lower prices.

8. Perfect Competition Example

9. Lots of competition

10. What happens if a vineyard prices their grapes too high?

11. Characteristics of perfect competition…
Many Sellers

12. Barriers to entry
Things that make it difficult for firms to enter the market.
Like start up costs.
There are few barriers to entry IF ANY in a perfect competition.

14. Characteristics of perfect competition…
Many Sellers
Identical products

15. Identical Products
Commodities – A product that is considered the same regardless of who makes or sells it.

16. Commodities

17. Characteristics of perfect competition…
Many Sellers
Identical products
Well Informed consumers

18. Characteristics of perfect competition…
Many Sellers
Identical products
Well Informed consumers
No price controls

19. Firms have No control over price

22. Take 3

23. Discuss with a partner
What are the 4 characteristics we see in perfect competition?
What control do firms have over price?
Give an example of a good that is in perfect competition.

24. Sometimes when you go to the store you have to decide between brands
Sometimes when you go to the store you have to decide between brands. Which one is better? Is one worth more? It’s not always orange and organge.

25. Market Organization Perfect Competition Monopolistic Competition
Oligopoly
Monopoly

26. Monopolistic Competition
Monopolistic Competition – a market organization where many firms produce goods that are similar enough to be substitutes but are not identical.

27. Example

28. Characteristics of monopolistic competition…
Many Firms

29. Characteristics of monopolistic competition…
Many Firms
Few barriers to entry

30. Characteristics of monopolistic competition…
Many Firms
Few barriers to entry
Limited control over price

31. Why don’t they have total control over price?
SUBSTITUTES

32. Characteristics of monopolistic competition…
Many Firms
Few barriers to entry
Limited control over price
Differentiated products

33. Monopolistic Competition
Firms have to fight for consumers dollars. They do this through:
Price changes
Changing physical characteristics
Level of service for the consumer
Building an image through advertising

36. Why have you never seen a commercial for paperclips?

37. What are some other goods or services involved in monopolistic competition?

39. Get a textbook Read pages 128 – 131.
Answer the questions that appear after each section of reading.
Identify Central ideas, main ideas and compare points of view.
Answer these on the notecard provided.

40. Discuss with a partner
What is the difference between perfect competition and monopolistic competition?
What is a barrier to entry?
Prepare for a QUIZ

42. Market Organization Perfect Competition Monopolistic Competition
Oligopoly
Monopoly

44. Oligopoly
Oligopoly–is a form of market structure where a few very large firms dominate the industry.

45. Examples

46. More examples

47. Even more Examples

48. One last one

49. Oligopoly Pure oligopoly–products are the same for all firms.
milk, paint, wireless service
Differentiated oligopoly–products are similar but different.
Coke & Pepsi

50. Barriers to entry There are many barriers to entry. Patents Licenses
Technology
Expensive
machinery

51. Issues with Oligopoly
Often these few firms work together to help increase the price of their goods.
Collusion – price fixing
Cartels – A formal agreement to coordinate production and prices

57. Monopoly
A pure Monopoly is a form of market organization where there is only one seller of a product.

58. Examples of Monopolies

59. Natural Monopoly
This situation occurs when the costs of production are minimized by having a single firm produce the product.
Barrier to entry is the cost of running the business

60. Natural Monopoly

61. Natural Monopoly

62. Technological Monopoly
If a firm controls a certain process or a scientific advance that no one else can have.
Barrier is the technology.

63. Technological Monopoly

64. Governmental Monopoly
Patents and licenses granted from the Government can create the monopoly.
Barrier is the government regulation of the product.

65. Government Monopoly

66. Why aren’t they monopolies anymore?

67. Antitrust Laws
Antitrust Laws work to prevent companies from forcing out competition. They…
Break up Monopolies
Block Mergers
Encourage competition
Federal Trade Commission and the Department of Justice

68. Government Regulation
It is in the best interest of consumers that competition exists between firms. This leads to lower prices.
Government works to prevent Monopolies and Oligopolies for this reason.

69. Standard Oil The company controlled all phases of oil production.
The case broke up standard oil into 34 smaller, competing companies.
Exon mobile and Shell are a result of this break up.

70. AT&T In the 1980’s it was broken up into 7 smaller companies.
Verizon is a direct result of this break up.

71. Kodak
For a period it was the only company that knew how to make AND develop color film.
They were forced to give other companies the technology.

73. Monopoly… it’s more than just a game, or is it?
“What economic principles are illustrated in the classic game Monopoly? And how are they illustrated?”
On Wednesday you will be given time in class to write out a response to the question above. While you play be sure to write down your thoughts as to what economic ideas are being used. Examples could be government regulation, prices, scarcity…

77. Apple Vs. Wombat Trial

78. The Flow Begin with FTC opening statement
Prosecution can make their case.
FTC will “cross examine” for clarification.
Defense will make their case.
Prosecution Closing Statement
Defense Closing Statement

80. Essay Prompt
One a sheet of lined paper answer the following in essay form.
What are the benefits and risks of allowing larger corporations from merging with competition? Discuss the impact on both consumers and producers. (Feel free to reference the apple/wombat case in your analysis.)

81. Monopoly Quiz
In an essay explain which economic principles are illustrated in the classic game Monopoly and discuss how are these are illustrated.
Put your finished quiz in the mesh and pick up a Trial assignment sheet to read over while you wait for your classmates.

82. Perfect Competition Many Firms Identical Items Keeps prices low
Makes Firms be efficient

83. Monopolistic Competition
Many Firms
Similar items (substitutes)
Prices could be higher but competition keeps them from going too high
Fight for consumers loyalty

84. Oligopoly Very Few firms control 70 – 80% of the market Similar items
Use price to drive out competition
Work together to dominate the market

85. Monopoly
One firm
No competition
Price is completely in their control