1. The most dangerous monopoly: When caution kills  https://www.youtube.com/watch?v=DvxT7fryE3Q 6.1 Demand Differences

2. Demand Differences  Although Perfectly Competitive Markets do exist, the most common market structures are either:  A monopoly or  Imperfect Competition  Monopoly  Sole supplier of a product, thus, demand curve is that of entire market; considerable ability to influence price  e.g. Megacomp – only seller of large supercomputers

3. Monopolistic Competition  A monopolistic competitor has some influence over the price it charges  A restaurant that serves unique food for example will lose/gain a greater percentage of customers due to a small percentage change in price  A monopolistic competitor’s demand curve is elastic  A monopolistic competitor’s demand curve is more elastic than the demand curves for monopolists

4. Oligopoly  Each business makes up a considerable part of the market  This leads to Mutual Interdependence – the relationship among oligopolists in which the actions of each business affect the other businesses  Businesses in an oligopoly can therefore cooperate to increase combined profits, or become rivals

5. Rivalry Among Businesses  Businesses in an oligopoly are concerned with maintaining their market share (proportion of total market sales)  If Business A (out of A, B, C & D) raises its price for a product and the other 3 don’t, then Business A will lose a lot of sales  If Business A lowers its price for a product, the other three will too, resulting in constant sales and lower total revenue  Thus, rival oligopolists end up with a kinked demand curve – a demand curve with 2 segments – one fairly flat and one steep

6. Cooperation Among Businesses  When oligopolists cooperate, its usually against the interest of consumers  Price Leadership  An understanding among oligopolists that one business will initiate all price changes in the market and the others will follow by adjusting their prices and output accordingly  Collusion  When oligopolists act together as if they are a monopoly  Cartel  A union of oligopolists who have a formal market-sharing agreement