1. Market Structures

2. Market Structures MOST COMPETITIVE LEAST COMPETITIVE
Pure Monopolistic Oligopoly Monopoly
Competition Competition

3. Perfect (Pure) Competition Monopolistic Competition Oligopoly Monopoly
Number of Firms
Variation in Products
Control Over Prices
Barriers to Entry
Examples

4. Perfect (Pure) Competition
Number of Firms
Variation in Products
Control Over Prices?
Barriers to Entry
Examples
MANY
Little to none, goods are practically identical
None
price takers, price set by market
(no profits)
Almost none
Agriculture, shares of stock, Gold

5. Monopolistic Competition
Number of Firms
Variation in Products
Control Over Prices
Barriers to Entry
Examples
MANY
Minor to significant
ADVERTISING is KEY!
Minimal, dep.on advertising
No big profits in long run
Very few
Fast food, clothes, grocery stores, barber shops

6. High Oligopoly Number of Firms Variation in Products
Control Over Prices
Barriers to Entry
Examples
Varies, but only a FEW LARGE sellers
Minor in most cases
Some, interdependent with competition
High
Home improvement stores, music labels Soft Drinks, college book stores

7. ONE NONE TOTAL Monopoly Number of Firms Variation in Products
Control Over Prices
Barriers to Entry
Examples
ONE
NONE
TOTAL
Extremely High
Public Water, Small town stores, MARTA

8. ONE MANY MANY NONE Some TOTAL High Perfect (Pure) Competition
Monopolistic Competition
Oligopoly
Monopoly
Number of Firms
Variation in Products
Control Over Prices
Barriers to Entry
Examples
Varies, but only a FEW LARGE sellers
ONE
MANY
MANY
Little to none
Minor in most cases
NONE
Significant
None, price takers
Some
Very little
TOTAL
Almost none
Extremely High
Very few
High
Fast food, clothes, grocery stores, barber shops
Agriculture, shares of stock, Gold
Public Water, Small town stores, MARTA
Home improvement stores, Soft Drinks, college book stores

9. Performance Task Tie-In
Part I
Which type of market does your business face?
Are there lots of similar companies?
Will you need to advertise your differences?
Will you have total control over prices or will you have to “play along” with the market?
Is there anything (other than collecting resources) preventing you from getting into the market?

11. Business Organizations
3 basic business structures
Sole Proprietorship – one person owns/manages
Partnership – 2 or a small group
Corporation – a group of shareholders
Each has various costs and benefits
All types must deal with 4 general issues
Liability, life expectancy, financial options, and taxes

12. Sole Proprietorships Advantages Low start-up costs Keeps all profits
Full control
Can respond to market quickly
Easy to discontinue
Disadvantages
100% Owner liability
Legal, debt, taxes, etc
BIG DEAL!!!!
Life expectancy of company
Limited access to resources

13. Partnerships Advantages Low startup costs
Take advantage of specialization
Larger pool of capital
Somewhat limited liability
LLP vs. General partnership
Disadvantages
Potential for conflict
Unlimited liability overall
Split profits

14. Corporations Advantages Limited liability Much larger pool of capital
Take advantage of specialization
Prestige
Disadvantages
Difficulty of startup
corporate charter, stocks
Double taxation
The corporation is a SEPARATE individual from the people who run it.
Loss of control
More regulation

16. What’s On the Test Supply/Demand Specialization/Voluntary Exchange
Why do people trade?
Why do we specialize?
Circular Flow
Which direction do the arrows flow?
What are the components?
Market Structures
What are the characteristics of the 4?
How does each structure affect prices/profits?
Business Organizations
Pros/Cons of each type of Organization
Supply/Demand
How are prices set in a market?
Law of Supply/Law of Demand
RIPEN/GRENT
What happens to equilibrium price/quantity when supply/demand shift
Price Floors/Ceilings
Elasticity