2.  Features of a Market. Such as:  Ease of entry into the market  Low barriers to entry  Number of buyers/sellers  Forms of competition

3.  This market structure is not real. It is guided strictly by the laws of supply and demand.  It is a theory that economist created to show what a true competitive market would look like.

4.  Commodities (ID products)  Easy entry/exit  Low barriers to entry  Many buyers and sellers  Consumers are well informed  No price control – no market power  Example: the oil activity, agricultural products

5.  This is a REAL market structure. You shop in it regularly.  It is based on differentiating your products to increase its uniqueness.

6.  Similar products  Differentiate  So similar you can substitute  Easy entry/exit  Many buyers and sellers  Consumers are well informed  Some price control – some market power  Since the products are differentiated, you can charge a little more because of its uniqueness.  Example: cheeseburger fast food, shampoo

7.  You must have:  5 non-price factors drawn and marked on your shoe  Name your shoe  Create a slogan  Create a logo  All of these must be on the front of your shoe. We will vote on Thursday. The winner gets 6 EXTRA CREDIT POINTS ON YOUR TEST!

8.  A monopoly is when one producer sells a good or service. Since he is the sole provider, he can charge whatever price he/she wants.

9.  3 characteristics  Sole producer (high market power)  No close substitutes  High barriers to entry

10.  Natural Monopoly – single producer that produces most efficiently b/c of the economies of scale.  Example – power companies  Geographic Monopoly – a monopoly due to location.  Example – Disney World, the movie theater, Six Flags  Technological Monopoly  Government Monopoly

11.  Technological Monopoly – a producer is the only one with a certain technology or way of producing.  Ex. Patent and copyright.  Ex. Polaroid Camera  Government Monopoly – the government is the sole producer of a product.  Example – water company, 1 st class mail

12.  A market structure where there are only 3-5 producers that produce the good or service

13.  Characteristics  3-5 producers  Differentiated products  High barriers to entry and high market power  Example – cereal industry  Kellogg, Post, and General Mills  American Cars – GM, Ford, Chrysler/Dodge

14.  Oligopolies compete legally with  price wars  Differentiation of products

15.  Illegal Oligopolies  Cartel – openly announce they are a cartel. They TELL they are a cartel Cartels openly set prices and production Ex. OPEC Collusion – secretly set prices and production. Both are illegal in the US because they set prices.

16.  If they government didn’t step in to regulate markets, do you think problems would arise?  YES – that is why we have antitrust acts.

17.  Antitrust acts were created to prevent big businesses from dominating a market and acting like a monopoly or trust.

18.  Interstate Commerce Act – 1887  Regulated trade and did not allow price setting or price discrimination.  Sherman Antitrust Act 1890 – prohibits any agreements, contracts, or conspiracies that would restrain trade – too vague – Clayton antitrust act strengthened the wording of Sherman.  Federal Trade commission act 1914 – created the Federal Trade Commission (FTC) to investigate allegations of unfair methods of competition.