Warm-Up Market Structures and Competition

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Warm-Up Market Structures and Competition

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Words to Know

Fill in this table as you work through the lesson. You may also use the glossary to help you.

compete to work toward a goal while attempting to defeat

monopolistic competition

a market structure in which sellers produce the

same item but each producer sets its price and

quality without impacting the whole market

monopoly a market that has a supplier of a good or service

Lesson Goals

Learn about market structures.

Discover how

affect the economy.

Analyze the

between monopolistic competition and pure competition.

Explain how

function.

Lesson Question

WK2


Market Structures and CompetitionWarm-Up

Words to Know

Competition

Competition occurs when two or more work to gain business from consumers.

• Producers compete by offering incentives to consumers.

• Competition is not always present in the market.

Competition and Market Structures

Monopoly

Oligopoly

Monopolistic competition

Pure competition

COMPETITIONCOMPETITION

oligopoly a market situation that exists when there are businesses in a marketplace

pure competitiona market with many sellers of products, flow

of information, and free entry to and exit from the marketplace

sovereignty a influence on a market

WK2


Warm-Up Market Structures and Competition

Why Competition Matters

Market structures affect the that Kaitlyn has available to her.

Kaitlyn wants to purchase new software for her computer. She wants to

find a product that will meet her needs, and she has price requirements

to keep her within her budget.


Market Structures and Competition

Monopoly

A monopoly is a market that has a supplier of a good or service.

2Slide

Instruction

How Monopolies Form

Monopolies can form when:

• there are no close for available goods.

• there is a preventing producers from entering the market

Natural Monopolies

Natural monopolies form when one producer can naturally meet the entire

of the market.

• Occurs because cost of production is too for more producers

• Can include , such as electricity providers

Technological Monopolies

Technological monopolies occur when one producer controls a of production.

• This can occur when a is issued.

• A producer has control of the only way to create a product.


Market Structures and Competition

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4

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Government Monopolies

Government monopolies are created and run by the government of a nation.

• The producer is the only one in the specific market.

• Other producers are not allowed to enter the market by .

Consumers and Monopolies

In a monopoly, there is little or no consumer .

• Consumers have choices.

• Prices do not vary because there is no present.

• Consumers must purchase what is available to them.

Oligopoly

An oligopoly exists when there are a producers that dominate a marketplace.

How Oligopolies Form

Oligopolies can form when:

• there are no close for available goods.

• there is a preventing producers from entering the market.

• firms cooperate to set or shut out competition.

Instruction


Market Structures and CompetitionInstruction

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8

Characteristics of Oligopolies

In an oligopoly:

• competition is .

• producers do not control the entirely.

• competition usually occurs through brand loyalty, , and promotions.

Oligopolies in American Industry

The car industry can be considered an oligopoly.

• There are significant barriers to .

• loyalty and image heavily affect .

Consumers and Oligopolies

Consumers have sovereignty in an oligopoly market.

• Consumer choices are limited and usually revolve around brand

.

• Consumers often have to pay more for goods and services because

oligopolies are .


Instruction Market Structures and Competition

Characteristics of Monopolistic Competition

Monopolistic competition occurs when:

• producers set their own , but their prices are in the same

range as their competitors’ prices.

• producers compete with other sellers by producing

goods.

• there are few barriers to entering the market.

Monopolistic Competition and Consumers

Consumer sovereignty is limited in a system of monopolistic competition.

• Producers must still provide goods that want to buy.

• Consumers have more because there are fewer barriers to entering the market.

Pure Competition

Pure competition occurs when producers sell goods and services.

Instruction

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12

Monopolistic Competition

Monopolistic competition occurs in a market without identical products.


Market Structures and CompetitionInstruction

Pure Competition and Consumers

Consumer is greatest in a system of pure competition.

• Consumers can affect the market by making based on price.

• Consumers have few choices because goods are identical and prices are the same.

• Competition creates prices.

Characteristics of Pure Competition

Pure competition occurs when supply identical goods.

• There are few barriers to entry.

• Firms have no control over price, as it is based solely on and demand.

• Producers have a relatively market share.

• Consumers decide what to purchase based purely on .

12Slide


Market Structures and CompetitionSummary

2Slide

Review: Competition and Market Structures


MORE COMPETITIONLESS COMPETITION

competition



competition



competition

Answer

Lesson Question How do market structures affect competition??


Market Structures and CompetitionSummary

Review: Monopolies and Oligopolies

Number of producers One A few

Barriers to entry High High

Basis of competition None Quality and service

Effect on consumers No choices Few choices

Review: Monopolistic Competition and Pure Competition

competition

competition

Number of producers Many Many

Barriers to entry Low Low

Basis of competition Price, quality, features and service

All firms sell at the same price

Effect on consumers Many choices based upon brand loyalty

Goods are identical; prices are the same

2Slide


Summary Market Structures and Competition

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Warm-Up Market Structures and Competition

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