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Warm Up:Why does competition influence price?
Look over the products at your desks. Identify the firms’ competition in its industry (as a lot, a little, or none). And then put the products in order from most to least competition.
Market Structures
The NATURE and DEGREE of COMPETITION among firms in the same industry
There are 4 Market Structures
1. Perfect Competition
2. Monopolistic Competitioin
3. Oligopoly
4. Monopoly
Make a Table in your notes:
Perfect Competition
Monopolistic Competition
Oligopoly Monopoly
Products Are
Level of Competition
Control over Price
Advertising
Example
PERFECT COMPETITION
Products Are:– Identical, no name brands
Competition:– Lots of small competitors
Control Over Price:– No control over price
Advertising:– No need, No way to distinguish.
MONOPOLISTIC COMPETITION
Products Are:– Similar, with name brands
Competition:– Lots of competitors
Control Over Price:– Some Control when consumer is brand loyal
Advertising:– Lots to create differentiations
OLIGOPOLY
Products Are:– Similar, with name brands
Competition:– FEW major competitors
Control Over Price:– Some, when consumers are loyal
Advertising:– Much, to beat out rival & differentiate
MONOPOLY
Products Are:– Unique
Competition:– None
Control Over Price:– Total
Advertising:– No need
Create a list
Write down 4 different goods for each of the Market Structures that we discussed yesterday. Use your white boards and discuss with your groups
Spectrum of Demand
Elastic: a change in price results in a large change in quantity demanded, many substitutes
Inelastic: a change in price results in a little to no change in quantity demanded, few to no substitutes
Perfect Competition Monopoly
OligopolyMonopolistic Competition
Cut & Paste Logo Time
Each group has in front of them:– Paste, scissors and numerous company logos
Each student must cut and paste at least 6 different companies and place them on the spectrum varying their elasticities.