Market Structures Theater Today: stock market! Woah! Everyone read page 169- 177
Market Structures Theater Group 1: Perfect competition (p 170-172) Group 2: Monopolistic competition (p 173) Group 3: Oligopoly (p 174-175) Group 4: Monopoly (p 175-177) Your task: create a skit or scenario that teaches the major ideas of your group’s market structure. At minimum 2 minutes long; at maximum 5 minutes long. We will present tomorrow, after 15 minutes to finish prep time. Everyone must be involved in the skit in some way.
Market structures theater! You have 10 minutes to prepare as a group. Then, each group will present 2 minutes minimum
Market Structures – in your group, take 5 minutes to fill out what you can
Competitive markets, aka “price takers” Pure competition Coke machine or vending machine Stock market Monopolistic competition Designer clothes, shampoo,, aspirin
Pure Competition Many buyers and sellers Nobody with enough power to influence prices because Similar products – choices made by price only Informed buyers who compare products Easy exit and entry into market
Pure Competition Few real-life markets meet these conditions. Why? Hard to meet all five requirements.
Monopolistic Competition: all conditions of perfect competition, except for identical products Product differentiation Real or perceived Shoes, computers, phones Non-price competition What else is at play here? Why? Increased profits based on demand shifts Advertising!
Non competitive markets, aka “price markers” Oligopoly Auto industry Fast food Monopoly Utility companies
Oligopoly: power in the hands of a few Few large sellers When one acts, the others typically follow Similar products Set apart only by product enhancements Difficult market entry – consumer loyalty
Oligopoly: power in the hands of a few Collusion: price-fixing Why? Examples? OPEC, diamonds, etc
Monopoly: power in the hands of one Single suppliers No close substitutes available Difficult market entry Some monopolies are good and necessary – why?
Monopoly: power in the hands of one Natural monopoly: It’s more cost-effective to have one company produce the product Utilities Geographic: Only one in the area Technological Patents Government Water, alcohol laws
Market Structures Monopolistic Competition Perfect Competition Least Competitive Most Competitive Monopolistic Competition Perfect Competition Monopoly Oligopoly Examples: Utilities- Water & Electricity Automobiles Telecommunications Airlines Designer clothes Hotels Hair Salons Agriculture
Market Structures – page 175 in your textbook