TYPES OF MARKETS: PRICING

ASSIGNMENT: PARTNERS BRAINSTORM AN EXAMPLE OF EACH OF THE FOUR TYPES OF MARKETS 1.Monopoly a)Name the product b)Name the company c)Describe the market 2.Oligopoly a)Name the product b)List the major companies c)Do they try to differentiate their product? How? 3. 3.Perfectly Competitive a)Name the product b)List the market price c)Name the source of your information 4. 4.Monopolistic Competitive a)Name the product b)Describe the features used to differentiate the product from other products

Perfectly CompetitiveMonopolyMonopolistic Competitive Oligopoly # of sellers ManyOneManyFew Product: Identical? Different? IdenticalNo close substitutesDifferentiatedIdentical or Differentiated Ease of entry into market EasyHardEasyHard Control over price Price Taker Price Maker Depends -differentiated? -other guy? Setting Prices in Different Markets

Pricing and Quantity in a Monopolistic Market Price is limited by the height of the demand curve Quantity QQ0 Costs and Revenue Demand Average total cost Marginal revenue Marginal cost Monopoly price Q MAX B A

Pricing and Quantity in a Perfectly Competitive Market Price and demand are the same

Pricing and Quantity Monopolistic Competitive

HOW IS PRICE AND QUANTITY DETERMINED IN AN OLIGOPOLY? The best pricing, production, and quantity decisions for each firm depend on what the other firms are doing. Video clip of Oligopoly and game theoryVideo clip of Oligopoly and game theory (start at 3:30) Video clip of Oligopoly and game theory

The Prisoner’s Dilemma Bonnie ConfessRemain Silent Clyde Confess 8 years 20 years Goes free Remain Silent Goes free 20 years 2 years

GAME THEORY IS ALL ABOUT TRUST Golden Balls Clip Weirdest Golden Ball Clip Golden Balls

Your Price HighLow Competitor’s Price High Your Profit: $100 Competitor’s: $100 Your Profit: $120 Competitor’s: $50 Low Your Profit: $50 Competitor’s: $120 Your Profit: $80 Competitor’s: $80

Your Selection ABC Your Adversary’s Selection A You receive: F Adversary: F You receive: F Adversary: B You receive: F Adversary: A B You receive: B Adversary: F You receive: C Adversary: C You receive: D Adversary: B C You receive: A Adversary: F You receive: B Adversary: D You receive: C Adversary: C