The document outlines four main market structures: perfect competition, monopolistic competition, oligopoly, and monopoly. It discusses the characteristics of each market structure, including the number of firms, product control, competition level, and market entry barriers. Additionally, it highlights the implications of monopolies and government regulations related to market structures.

1. Competition and
Competition and
Market Structures
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
What is a Market
Structure?
Structure?

The
The nature
nature and
and degree
degree of
of
competition among firms in the
competition among firms in the
same industry
same industry

We classify
We classify 4
4 Market Structures by
Market Structures by
asking questions like:
asking questions like:

3. We classify Market Structures by
We classify Market Structures by
asking:
asking:
1.
1. How much
How much control over price
control over price does each
does each
firm have?
firm have?
2.
2. How
How many firms
many firms are competing
are competing in the
in the
market?
market?
3.
3. How
How large/what size
large/what size are each of the
are each of the
firms?
firms?
4.
4. What are the
What are the characteristics of the
characteristics of the
products
products in each market?
in each market?
5.
5. How easy is it for new firms to
How easy is it for new firms to enter the
enter the
market
market?
?

4. Market Structures
Market Structures
 Perfect Competition
Perfect Competition
 Monopolistic Competition
Monopolistic Competition
 Oligopoly
Oligopoly
 Monopoly
Monopoly

5. MONOPOLY
MONOPOLY
Warm Up
Warm Up:
:
Why did the U.S. gov’t
Why did the U.S. gov’t
make monopolies illegal??
make monopolies illegal??

6. MARKET STRUCTURES
MARKET STRUCTURES:
:

7. Perfect Competition
Perfect Competition
Meets 5 Conditions:
Meets 5 Conditions:
1.
1. Large number of buyers and sellers
Large number of buyers and sellers
2.
2. Buyers and sellers deal in
Buyers and sellers deal in identical
identical
products
products
3.
3. Buyers and sellers
Buyers and sellers act independently
act independently
4.
4. Buyers and sellers are
Buyers and sellers are well-informed
well-informed
5.
5. Buyers and sellers are free to
Buyers and sellers are free to enter
enter
into, conduct, or get out of
into, conduct, or get out of
business
business

8. Imperfect Competition-
Imperfect Competition-
lacks 1 or more of the 5 conditions
lacks 1 or more of the 5 conditions
1.
1. Monopolistic Competition
Monopolistic Competition
2.
2. Oligopoly
Oligopoly
3.
3. Monopoly
Monopoly

9. Monopolistic Competition
Monopolistic Competition
Has every
Has every condition except
condition except identical
identical
products
products!
!
These Firms can
These Firms can monopolize
monopolize a small part
a small part
of the market by:
of the market by:
1.
1. Product Differentiation
Product Differentiation – make their
– make their
product seem
product seem special
special through ads
through ads
2.
2. Non-price Competition
Non-price Competition - use of
- use of
advertisements, giveaways, promotions
advertisements, giveaways, promotions
to get your business
to get your business

10. Oligopoly
Oligopoly
Where few very large sellers
Where few very large sellers
dominate the industry
dominate the industry
Any firm within this market
Any firm within this market
structure can cause a change
structure can cause a change
in output, sales, or prices
in output, sales, or prices
A few control 2/3s of the
industry

11. Must use
Must use Interdependent
Interdependent
Behavior
Behavior

Collusion:
Collusion:
•A
A formal agreement
formal agreement to set prices or limit
to set prices or limit
output, acting as one company.
output, acting as one company.

Price Wars:
Price Wars:
•When one firm
When one firm lowers prices
lowers prices other firms
other firms
will
will follow
follow in a series of price cuts that
in a series of price cuts that
result in unusually low prices
result in unusually low prices

12. Monopoly
Monopoly
Market Structure
Market Structure
with only
with only
1 seller
1 seller of a
of a
particular product
particular product
The federal
government has
outlawed
monopolies for
over 100 years.
Trustbusting
T.R. and the
Sherman Anti-
Trust Act
started it off!

13. Natural Monopoly
Natural Monopoly
-A market situation where
-A market situation where costs of
costs of
production
production are minimized
are minimized by having a
by having a
single firm produce the product
single firm produce the product
What are the other
natural monopolies in
Western New York?

14. Geographic Monopoly
Geographic Monopoly
A monopoly based on
A monopoly based on
absence
absence of other sellers
of other sellers
LUCK OF LOCATION!!!
Example: Thruway gas
stations!!

15. Technological
Technological
Monopoly
Monopoly
Based on the
Based on the ownership of a method
ownership of a method of
of
production, scientific advance, method
production, scientific advance, method
or process
or process
•Patents - granted by government, exclusive right to
manufacture, use, or sell any new and useful
Invention
•Copyrights - given to art or literary work and is
exclusive right of artist to publish, sell, or reproduce
for their lifetime plus 70 years

16. Government Monopoly
Government Monopoly
Government owns and
Government owns and
operates
operates a monopoly at
a monopoly at
National, State and Local levels
National, State and Local levels
What other services
does govt provide us
that are paid for
with our taxes?

17. HOMEWORK
HOMEWORK 


Grab your textbook and you have the
Grab your textbook and you have the
remainder of the period to work on
remainder of the period to work on
this assignment. It will be collected
this assignment. It will be collected
for a grade tomorrow!!
for a grade tomorrow!!

18. Top Ten Most Common Words
Top Ten Most Common Words
WRITTEN
WRITTEN in the U.S.
in the U.S.
10. For
10. For
9. It
9. It
8. Was
8. Was
7. Is
7. Is
6. To
6. To
5. In
5. In
4. A
4. A
3. And
3. And
2. Of
2. Of
1.
1. The
The

19. It’s your time to
It’s your time to shine
shine
with
with design
design!
!
Design advertisement posters for the
Design advertisement posters for the
market structures your group has
market structures your group has
been assigned. Your posters must
been assigned. Your posters must
have the following…
have the following…
*A Slogan
*Picture of the Product or Service
*Company Name
Please: DO NOT write what Market Structure it is!

20. Pop Quiz Time!!
Pop Quiz Time!!
1.
1. Name three products that would fall
Name three products that would fall
in the monopolistic competition
in the monopolistic competition
market structure.
market structure.
2.
2. What makes an oligopoly, an
What makes an oligopoly, an
oligopoly?
oligopoly?
3.
3. What are two different industries
What are two different industries
that fall in oligopoly?
that fall in oligopoly?
4.
4. Name three legal monopolies.
Name three legal monopolies.

21. Pop Quiz
Pop Quiz
5. What is product differentiation?
5. What is product differentiation?
6. What is collusion?
6. What is collusion?
7. How do price wars help consumers?
7. How do price wars help consumers?
8. What are three perfect competitive
8. What are three perfect competitive
firms?
firms?
9. What makes perfect competition
9. What makes perfect competition
perfect?
perfect?
10. Why are most monopolies illegal?
10. Why are most monopolies illegal?

22. Answers:
Answers:
1.
1. 1 pt. each: shampoo, cereal, soap,
1 pt. each: shampoo, cereal, soap,
hair spray, soup, computer games.
hair spray, soup, computer games.
2.
2. 1 pt.: a few firms; 1 pt.: 2/3’s
1 pt.: a few firms; 1 pt.: 2/3’s
industry.
industry.
3.
3. 1 pt. each: soda, gelatin, fast food,
1 pt. each: soda, gelatin, fast food,
gas manufacture, local grocery
gas manufacture, local grocery
markets, etc.
markets, etc.
4.
4. 1 pt. each: Nat’l Fuel, Nat’l Grid,
1 pt. each: Nat’l Fuel, Nat’l Grid,
Books, Songs, Scripts, ©
Books, Songs, Scripts, ©

23. Answers:
Answers:
5.
5. 1 pt.: advertising to make g&s
1 pt.: advertising to make g&s
seem unique although not really;
seem unique although not really;
make it seem
make it seem special
special.
.
6.
6. 1 pt.: When firms work together to
1 pt.: When firms work together to
limit production or raise prices
limit production or raise prices
7.
7. 1 pt: When firms compete and keep
1 pt: When firms compete and keep
lowering prices!!
lowering prices!!

24. Answers:
Answers:
8.
8. 1 pt each: any farm products:
1 pt each: any farm products:
apple, orange, beef, milk, etc.
apple, orange, beef, milk, etc.
9.
9. 2 pts:
2 pts: many firms
many firms that sell
that sell identical
identical
products
products
10.
10. 1 pt: too much power, price
1 pt: too much power, price
gouging, etc.
gouging, etc.

25. What happens when the
What happens when the
market fails??
market fails??
HOMEWORK:
HOMEWORK:
Create a 4 – Square for each
Create a 4 – Square for each
of the four market failures
of the four market failures