Presentation on theme: "Competition and Market Structures"— Presentation transcript:
1 Competition and Market Structures How well do you remember the four market structures? Write them out with two example.Go Back Over Your Notes!!
2 What is a Market Structure? The nature and degree of competition among firms in the same industryWe classify 4 Market Structures by asking questions like:
3 We classify Market Structures by asking: How much control over price does each firm have?How many firms are competing in the market?How large/what size are each of the firms?What are the characteristics of the products in each market?How easy is it for new firms to enter the market?
7 Perfect Competition Meets 5 Conditions: Large number of buyers and sellersBuyers and sellers deal in identical productsBuyers and sellers act independentlyBuyers and sellers are well-informedBuyers and sellers are free to enter into, conduct, or get out of business
8 Imperfect Competition- lacks 1 or more of the 5 conditions Monopolistic CompetitionOligopolyMonopoly
9 Monopolistic Competition Has every condition except identical products!These Firms can monopolize a small part of the market by:Product Differentiation – make their product seem special through adsNon-price Competition - use of advertisements, giveaways, promotions to get your business
10 A few control 2/3s of the industry OligopolyWhere few very large sellers dominate the industryAny firm within this market structure can cause a change in output, sales, or pricesA few control 2/3s of the industry
11 Must use Interdependent Behavior Collusion:A formal agreement to set prices or limit output, acting as one company.Price Wars:When one firm lowers prices other firms will follow in a series of price cuts that result in unusually low prices
12 Market Structure with only 1 seller of a particular product MonopolyThe federal government has outlawed monopolies for over 100 years.Trustbusting T.R. and the Sherman Anti-Trust Act started it off!Market Structurewith only1 seller of aparticular product
13 Natural Monopoly Legal Monpolies -A market situation where costs of production are minimized by having a single firm produce the productWhat are the other natural monopolies in Western New York?
14 A monopoly based on absence of other sellers Geographic MonopolyA monopoly based onabsence of other sellersLUCK OF LOCATION!!!Example: Thruway gas stations!!
15 Technological Monopoly Based on the ownership of a method of production, scientific advance, method or processPatents - granted by government, exclusive right tomanufacture, use, or sell any new and usefulInventionCopyrights - given to art or literary work and isexclusive right of artist to publish, sell, or reproducefor their lifetime plus 70 years
16 Government MonopolyGovernment owns and operates a monopoly at National, State and Local levelsWhat other services does govt provide us that are paid for with our taxes?
17 HOMEWORK Grab your textbook and you have the remainder of the period to work on this assignment. It will be collected for a grade tomorrow!!
18 Top Ten Most Common Words WRITTEN in the U.S. 10. For9. It8. Was7. Is6. To5. In4. A3. And2. OfThe
19 It’s your time to shine with design! Design advertisement posters for the market structures your group has been assigned. Your posters must have the following…*A Slogan*Picture of the Product or Service*Company NamePlease: DO NOT write what Market Structure it is!
20 Pop Quiz Time!!Name three products that would fall in the monopolistic competition market structure.What makes an oligopoly, an oligopoly?What are two different industries that fall in oligopoly?Name three legal monopolies.
21 Pop Quiz 5. What is product differentiation? 6. What is collusion? 7. How do price wars help consumers?8. What are three perfect competitive firms?9. What makes perfect competition perfect?10. Why are most monopolies illegal?
23 Answers:1 pt.: advertising to make g&s seem unique although not really; make it seem special.1 pt.: When firms work together to limit production or raise prices1 pt: When firms compete and keep lowering prices!!
24 Answers: 1 pt each: any farm products: apple, orange, beef, milk, etc. 2 pts: many firms that sell identical products1 pt: too much power, price gouging, etc.
25 What happens when the market fails?? HOMEWORK:Create a 4 – Square for each of the four market failures