1. Free Powerpoint Templates Page 1 Free Powerpoint Templates Four Main Types of Markets Chapter 7

2. Free Powerpoint Templates Page 2 Tap water Last chance for gas 50 miles Monopoly Restaurants Jeans Monopolistic Competition Tennis balls Crude oil Oligopoly Number of Sellers? Perfect Wheat Milk Competition Type of Products? Identical products Differentiated products One firm Few firms Many firms Characteristics define Type of Market

3. Free Powerpoint Templates Page 3 Characteristics of Markets: Market structures are defined by their characteristics: 1.Number of sellers in the market 2.Type of product that sellers sell Are they identical or somewhat different? 3.Ease of entry into the market easy or difficult Are there barriers to entry?

4. Free Powerpoint Templates Page 4 Barriers to Entry Into Markets: 1.Need for large financial resources 2.High brand equity (the value of having a well known brand) consumers will spend more to buy Coca Cola than the store brand 3.Legal barriers copyrights and patents 4.Economies of scale extremely low average total costs 5.Exclusive ownership of a scarce resource Alcoa owned nearly all sources of bauxite

5. Free Powerpoint Templates Page 5 A Perfectly Competitive Market o In a Perfectly Competitive Market o SELLERS: The market has many buyers and many sellers o PRODUCTS: All firms sell identical goods o PRICE: Price takers meaning they can only sell goods at the equilibrium price o ENTRY: Firms have easy entry into and exit out of the market EOC study guide Microeconomics #6

6. Free Powerpoint Templates Page 6 A Perfectly Competitive Market o Examples: o Wheat farmers o Makers of latex balloons o Apple growers o Video clip of perfect competition Video clip of perfect competition

7. Free Powerpoint Templates Page 7 A Monopolistic Market o Characteristics of a Monopoly o SELLERS: The market consists of one seller o PRODUCT: The single seller sells a product that has no close substitutes o PRICE: price makers they “search” for the price that generates the most profit o ENTRY: The barriers to entry are high, which means that entry into the market is extremely difficult Shopping in Bethel, Alaska EOC study guide Microeconomics #5

8. Free Powerpoint Templates Page 8 A Monopolistic Market o Examples: o “Last chance for gas in 100 miles" o Movie theatre foods o One ferry that goes to an island without a bridge o The only cable company in town

9. Free Powerpoint Templates Page 9 A Monopolistic Competitive Market o In a Monopolistic Competitive Market: o SELLERS: The market includes many buyers and many sellers o This is where the “competitive” comes in o PRODUCT: Firms produce and sell slightly differentiated products o This is where the “monopolistic” comes in o PRICE: price searchers o ENTRY: Firms have easy entry into and exit out of the market EOC study guide Microeconomics #8

10. Free Powerpoint Templates Page 10 A Monopolistic Competitive Market o Examples: o Computer games o CDs o Video clip of monopolistic competition Video clip of monopolistic competition

11. Free Powerpoint Templates Page 11 An Oligopolistic Market o Characteristics of an Oligopoly: o SELLERS: It has few sellers o PRODUCTS: Firms produce and sell either identical or slightly differentiated products o PRICE: Price searchers o ENTRY: The barriers to entry are significant—it is difficult to enter EOC study guide Microeconomics #7

12. Free Powerpoint Templates Page 12 An Oligopolistic Market o Examples: o Car manufacturers o Breakfast cereals o Cigarette manufacturers o Video on oligopoly (end at 3:30) Video on oligopoly

13. Free Powerpoint Templates Page 13 Perfectly Competitive MonopolyMonopolistic Competitive Oligopoly # of sellers ManyOneManyFew Type of Product IdenticalNo close substitutes DifferentiatedIdentical or Differentiated Ease of entry into market EasyHardEasyHard