Epf2i monopolies and collusion
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Epf2i monopolies and collusion

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Epf2i monopolies and collusion Epf2i monopolies and collusion Presentation Transcript

  • Role of Producers & Consumers
    in a Market Economy
    EPF2i. Monopolies and Collusion
  • Monopolies & Collusion
    Monopolies and collusion among sellers eliminate competition
    In industries with less competition, prices are likely to be higher
    2
  • Essential question:
    What is an industry?
    3
    View slide
  • An industry is:
    A distinct group of productive or profit-making enterprises sharing similar products or services
    Ex. the automobile industry
    4
    View slide
  • Essential question:
    What are the characteristics of competitive and uncompetitive markets?
    5
  • Competition in Industries:
    The level of competition in an industry is affected by :
    the ease with which new producers can enter the industry
    And by the availability, price and quantity of substitute goods and services
    6
  • Essential question:
    What collusion?
    7
  • Collusion:
    Is when competing firms make a secret agreement to try to control a market
    Collusion (practiced by cartels) is illegal in the United States
    It reduces the level of competition in a market
    Is more difficult in markets with large numbers of buyers and sellers.
    8
  • Essential question:
    How are prices affected when markets are more competitive? Less competitive?
    9
  • Markets with Perfect Competition
    Have many buyers with perfect information and sellers all selling identical products
    Sellers here have no market power – no control over the market price
    For example, a grower of plain white rice can only sell at the market price – no one will pay more because they can get plain white rice from any supplier at that price
    10
  • Less Competitive Markets:Monopolies & Oligopolies
    A monopoly – has one supplier of a product. The seller here has market power and can control both price and quantity.
    An oligopoly – when there are few sellers, competition is limited, and producers are able to gain more control of the market
    A natural monopoly - when 1 producer can supply total output in a market at a cost that is lower than when 2 or more producers divide product, competition may be impossible. In the absence of competition, govt regulations may then be used to try to control price, output and quality.
    11