1. Competition & Government

2. Word bank: increase, decrease, right, left, substitute, complementary, subsidies 1. Apple computers and Gateway computers are considered ______________ goods. 2. A dog and dog food are considered ________________ goods. 3. When supply or demand increases, the line shifts to the _______________. 4. When supply or demand decreases, the line shifts to the ____________. 5. If consumers get more disposable income then demand will ________________. Word bank: increase, decrease, right, left, substitute, complementary, subsidies 1. Apple computers and Gateway computers are considered ______________ goods. 2. A dog and dog food are considered ________________ goods. 3. When supply or demand increases, the line shifts to the _______________. 4. When supply or demand decreases, the line shifts to the ____________. 5. If consumers get more disposable income then demand will ________________.

3. 6. Which branch makes the laws? a. Legislative b. Executivec. Judiciald. Police 7. Which branch interprets the laws? a. Legislative b. Executivec. Judiciald. Police 8. Which branch enforces the laws? a. Legislative b. Executivec. Judiciald. Police 9. Which amendment was Prohibition and which repealed it? a. 19, 21b. 21, 18c. 18, 21d. 13, 22 10. A government ruled by ONE person would be what? a. Democracyb. Theocracyc. Monarchyd. Oligarchy 11. A government rules by a FEW people would be what? a. Democracyb. Theocracyc. Monarchyd. Oligarchy 6. Which branch makes the laws? a. Legislative b. Executivec. Judiciald. Police 7. Which branch interprets the laws? a. Legislative b. Executivec. Judiciald. Police 8. Which branch enforces the laws? a. Legislative b. Executivec. Judiciald. Police 9. Which amendment was Prohibition and which repealed it? a. 19, 21b. 21, 18c. 18, 21d. 13, 22 10. A government ruled by ONE person would be what? a. Democracyb. Theocracyc. Monarchyd. Oligarchy 11. A government rules by a FEW people would be what? a. Democracyb. Theocracyc. Monarchyd. Oligarchy

4. WARM-UP In your own words, what is a market? What happens in a market? In your own words, what is a market? What happens in a market?

5. MARKET supply demandsupply demand market price The interaction between supply and demand to determine the market price and quantity bought and sold.market pricesupply demandmarket price –EXAMPLES: Cable Market, Soft Drink Market, Fast Food Market, Cell Phone Market supply demandsupply demand market price The interaction between supply and demand to determine the market price and quantity bought and sold.market pricesupply demandmarket price –EXAMPLES: Cable Market, Soft Drink Market, Fast Food Market, Cell Phone Market

6. 3 Types of Market Structures Perfect Competition Monopoly Oligopoly Perfect Competition Monopoly Oligopoly

7. QUESTIONS WE WILL ASK ABOUT THESE MARKETS 1.What are some examples? 2.How many firms are in this market? 3.Who or what sets the price in this market? 4.How easy is it to get in this market? 5.How alike or different are the available products? 1.What are some examples? 2.How many firms are in this market? 3.Who or what sets the price in this market? 4.How easy is it to get in this market? 5.How alike or different are the available products?

8. Perfect Competition Examples: –Apple Farmers, Corn Farmers Number: –Many small firms Amount of price control: –HIGH Competition –NO Price control, prices set by supply & demand Examples: –Apple Farmers, Corn Farmers Number: –Many small firms Amount of price control: –HIGH Competition –NO Price control, prices set by supply & demand

9. Perfect Competition (cont.) Barriers (how easy is it to get in the market?): –Easy Entry, Easy Exit Nature of Product (How alike or different the available products are) : –Homogenous (goods are the same, all can be substituted for one another) EX: Red Delicious Apple Barriers (how easy is it to get in the market?): –Easy Entry, Easy Exit Nature of Product (How alike or different the available products are) : –Homogenous (goods are the same, all can be substituted for one another) EX: Red Delicious Apple

10. Monopoly: One company provides the product Examples: –Standard Oil of late 1800s Number: –1 Large Firm Amount of price control: –NO Competition / The monopoly sets the price Examples: –Standard Oil of late 1800s Number: –1 Large Firm Amount of price control: –NO Competition / The monopoly sets the price

11. Monopoly

12. Oligopoly Examples: –Cell phones, airlines, cereals, soft drinks Number: –A FEW large firms Amount of price control: –SOME Competition / SOME price control b/c the few large firms keep prices pretty close. Examples: –Cell phones, airlines, cereals, soft drinks Number: –A FEW large firms Amount of price control: –SOME Competition / SOME price control b/c the few large firms keep prices pretty close.

13. Oligopoly (cont.) Barriers: –Difficult Entry and Exit Nature of Product: –Differentiated (similar products but not exactly the same can be substituted) EX: Coke or Pepsi Whopper or Big Mac Barriers: –Difficult Entry and Exit Nature of Product: –Differentiated (similar products but not exactly the same can be substituted) EX: Coke or Pepsi Whopper or Big Mac

14. MERGERS Merger: is when two firms join together. Horizontal Merger: 2 firms w/ similar product lines combine –EX: Nike and Reebok combine. Vertical Merger: 2 firms working at different stages of production of a good combine. –EX: Ford buys a tire company Merger: is when two firms join together. Horizontal Merger: 2 firms w/ similar product lines combine –EX: Nike and Reebok combine. Vertical Merger: 2 firms working at different stages of production of a good combine. –EX: Ford buys a tire company

15. Mr. Egan’s Picture of Horizontal and Vertical Mergers

16. ONE FINAL THOUGHT QUESTION: If someone is mad about how much money they are making at a specific job or how many hours they are working, what can they do?

17. Labor Unions Union: organization that represents the interests of workers. (12% of workers) –Unions engage in collective bargaining, using mediation and arbitration to make conditions better for workers –Closed shop: you have to be in the union to be employed. Ford and General Motors have these. –Right-to-work states: states where the closed shop is illegal. Union: organization that represents the interests of workers. (12% of workers) –Unions engage in collective bargaining, using mediation and arbitration to make conditions better for workers –Closed shop: you have to be in the union to be employed. Ford and General Motors have these. –Right-to-work states: states where the closed shop is illegal.

18. Right to Work States What region of the country has the most right to work states? What part of the country has the least? What does a right to work state forbid? What region of the country are unions the strongest? What region of the country has the most right to work states? What part of the country has the least? What does a right to work state forbid? What region of the country are unions the strongest?

19. Competition Spectrum:

20. 1. When a company has a monopoly on a product what is the effect on price? 2. What choices do consumers have in a monopoly? 3. Do you think monopolies should be allowed? Why or why not? 4. What do mergers do for companies? 5. Perfect competition is impossible in America’s mixed economy, if it were possible there would be NO government regulation. How are prices determined in perfect competition? 6. Who determines prices in the oligopoly? BONUS: Why is competition a good thing for a market?