1. What would life be like without prices?

2. Market Equilibrium
A situation in which prices are relatively stable, and the quantity of goods or services supplied is equal to the quantity demanded.

3. Surplus
When quantity supplied is greater than quantity demanded

4. Shortage
When the quantity demanded is greater than the quantity supplied

5. Perfect Competition
1) Large number of buyers and sellers

6. Perfect Competition
2) Buyers and sellers deal in identical products.

7. Perfect Competition
3) Each buyer and seller acts independently… buyers compete with buyers…sellers compete with sellers

8. Perfect Competition
4) buyers and sellers are reasonably well informed.

9. Perfect Competition
5) buyers and sellers are free to enter into, conduct, or get out of business

10. Imperfect Competition
Perfect competition does not exist.
1) Monopolistic Competition
2) Oligopoly
3) Monopoly

11. Monopolistic Competition
Product differentiation
Non-price competition

12. Oligopoly
Market structure in which a few large sellers dominate the market
Each seller has the ability to effect prices of the industry as a whole.

13. Monopoly
A market structure with only one seller

14. Types of Monopolies 1) Natural monopoly
i.e., telephone companies, electricity, water, etc…
Economies of scale: when the average cost of production falls as the firm get larger.

15. 2) Geographic Monopoly
Monopoly based on the absence of other sellers in the area

16. 3) Technological Monopoly
Ownership or control of a manufacturing method, process, or other scientific advance
Patents and copyrights are a legal exception

17. 4) Government Monopoly
The government owns and operates production

18. Predicting Price
What can we expect to happen to the price of corn if there is bad weather this year?
S:PQD

20. Predicting Price
Verizon just announced that they will be offering the iPhone. What will happen to the price of owning an iPhone?
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22. Predicting Price
Skinny jeans are the new thing. Everybody’s wearing them and everybody wants them.
D: PQS

24. Predicting Price
We just found out that Taco Bell’s beef does not meet the minimum 40% mandated by the FDA
D: P QS