1. Chapter 7
Market Structures

2. Bell ringer 2/10
List 5 different ways that companies compete with each other.
Turn and talk

3. 4 Types of Market Structures
Perfect Competition
Monopolistic Competition
Monopoly
Oligopoly
Fill in chart using book with partner

4. Perfect Competition
A market structure in which a large number of firms all produce the same product
Production is small
Does not influence prices

5. 4 Conditions for Perfect Competition
Many buyers and sellers
Identical Products
Commodity-Same product regardless of who makes or sells
Milk, Notebook Paper, Water, Gasoline
Pt. 1 & 2 20/20 “Over the Barrel”

6. 4 Conditions for Perfect Competition continued…
Informed Buyers and Sellers
Buyers are looking for the best deal
Free Market Entry and Exit
Markets w/more firms (comp) have lower prices

7. Bell ringer 9/23
List the four conditions of perfect competition that we discussed yesterday.

8. Monopolistic Competition
Market structure in which many companies sell products that are similar but not identical.

9. 4 Conditions of Monopolistic Comp.
Many Firms
Few Artificial Barriers to entry
Slight control over price
Differentiated Products

10. Oligopoly
A market structure in which a few large firms dominate a market
Why would these companies set their prices higher and produce less of their products?
Examples: Four music companies control 80% of the market - Universal Music Group, Sony Music Entertainment, Warner Music Group and EMI Group
Six major book publishers - Random House, Pearson, Hachette, HarperCollins, Simon & Schuster and Holtzbrinck
Four breakfast cereal manufacturers - Kellogg, General Mills, Post and Quaker
Two major producers in the beer industry - Anheuser-Busch and MillerCoors

11. Monopoly wksht

12. 9/24
If you decided that you wanted to start a business, what types of factors would be present that might prevent you from being able to compete?

13. Barriers to Entry Competing with Larger Firms Problems
Typically work together with other large firms
ILLEGAL
Price War-lowers the market price
Collusion-agreement to set prices and production levels low
Price Fixing-one price for the same good
Cartels-Organizations that agree to coordinate prices and production

14. Monopoly A market structure dominated by a single seller.
What happens if: You have a rare disease and to cure the disease you must take a new antibiotic to help cure it, and without the antibiotic your future is terminal? What if only one firm makes that antibiotic?
Problem w/monopolies—take advantage of their market power and charge high prices

15. Classifying Markets Activity
With a group of no more than 3, classify the firms/products on the list you were given under one of the four market structures we have discussed. Include the following information:
1. Name of firm/product
2. Type of market structure it falls under
3. Reasons that you believe the firm exists in that market

16. Natural Monopolies
A market that runs most efficiently when one large firm supplies all of the output. Example: Water
-Technology and change can change natural monopolies. Ex: Phone companies

17. Bell ringer 9/29
Imagine that you and your friends plan to open a new convenience store. Brainstorm a list of 5 expenses that would be your start up costs.

18. How a Monopoly Forms:
If a firm’s start-up costs are high, and its average costs fall for each additional unit it produces, then this is called an economies of scale. (Characteristics that cause a producer’s average cost to drop as production rises)

19. Barriers to Entry & Costs
Price
Start-Up Costs
Technology
Efficient Market
Lowest prices possible
Will just cover costs

20. Bell ringer 9/25
What could be some other “barriers to entry” into a market besides start up costs?

21. WHAT IS THE GOAL OF THE GAME OF MONOPOLY?

22. One company owns all of the diamond mines in South Africa?

23. Bell ringer 10/1
From what we watched yesterday, list 3 reasons that you believe Wal- Mart to be either good or bad for our economy.

24. How Monopolies Make Money
Price Discrimination-division of customer into groups based on how much they will pay for a good.
Discounted Airfare
Manufacture’s rebates
Senior Citizen or Student Discounts
However for price discrimination to work a market must meet three conditions
Some market power
Distinct customer group
Difficult resale

25. Monopoly Subsearch
Complete the subsearch using the following directions
S: Skim-Scan-Survey
U: Underline key points
B: Bracket major passages and create notes in margin
S: Place symbols within the text (Stars, asterisk, arrows,etc.
E: Enumerate lists, Series
A: Abbreviations
R: React Personally
C: Make Connections to your life
H: Highlight
P.S. : Summarize each section from text in 3-4 sentences.

26. 10/2
What is a Price War?
List two ways that firms compete without lowering prices

27. Non Price Comparison
Phsyical Characteristics
Location
Service Level
Advertising, image or status

28. Government Monopolies
A monopoly created by the government
Gov can issue a patent.
gives a company exclusive rights to sell a new good or service for a specific period of time.
Patents guarantee that companies can profit from their own research without competition.
Franchise-the right to sell a good or service within an exclusive market. Ex: School Cafeteria, McDonalds, Subway.

29. Industrial Organizations
Government allows companies in an industry to restrict the number of firms in the market Ex: MLB, NBA, NFL

30. 9/29