Write down the names of three companies: competition. major competitors.

Size: px
Start display at page:

Download "Write down the names of three companies: competition. major competitors."

Transcription

1 Write down the names of three companies: 1. Company with very little competition. 2. Company with two to three major competitors. 3. Company with many competitors. Which situation do you think describes most markets in the United States?

2 Perfect also known as pure competition, large number of firms producing essentially the same product. No participants are large enough to have the market power to set the price of a homogeneous product. Buyers and sellers are so numerous that no one buyer/seller has any influence over the market price; price takers, price is determined by market supply and demand eg. 100 firms, each firm has 1% of the market Four Conditions: 1. Many buyers and sellers 2. Goods offered for sale are exactly the same/identical 3. Buyers and sellers have perfect access to information 4. Sellers are able to enter and exit the market freely

3 Condition Description Example(s) 1. Many Buyers and Sellers 2. Identical Products 3. Informed Buyers and Sellers 4. Free Market Entry and Exit

4 Commodities: Wheat Oranges Tomatoes Corn Crude Oil Stock Market

5 Monopoly - when one company controls the market of a good/service and can effectively dictate prices Microsoft, NFL, China s Pandas, Comcast, etc. Complete barrier to entry Government Monopolies a monopoly created by the government Patent gives a company exclusive rights to sell a new good or service for a specific period of time Franchise the right to sell a good or service within an exclusive market License a government issued right to operate a business

6 Price discrimination division of customers into groups based on how much they will pay for a product Market Power ability to control prices and total market output

7 Condition Description Example(s) 1. Discounted Airline Fares 2. Manufacturers Rebate Offers 3. Senior Citizen or Student Discounts 4. Children Fly or Stay Free Promotions

8 Monopolistic many companies selling similar products but not identical. Market for Jeans in the U.S. Four Conditions of Monopolistic 1. Many firms 2. Few artificial barriers to entry 3. Slight control over price 4. Differentiated products (main difference between perfect and monopolistic competition)

9 Condition Description Example(s) 1. Physical Characteristics 2. Location 3. Service Level 4. Advertising, Image or Status

10 Oligopoly a market structure in which a few large firms dominate a market; four largest firms produce at least 70-80% of the output. Automobile industry, commercial airlines, beer industry, cartels Characteristics High Barriers to Entry Collusion businesses work together to price fix, agreement to set prices Price Fixing agreement among firms to sell at the same or very similar prices Cartel a formal organization of producers that fix prices and control supply (OPEC)

11 1. Describe the four examples of price discrimination listed in the book (targeted discounts, pg. 163) 2. Define Nonprice competition (167). 3. Describe the four examples of nonprice competition (pg ) 4. Describe the four conditions of monopolistic competition (pg. 167) 5. Define cartel (171). 6. Define antitrust laws and trust (173).

12 Statement Concept (s) Explanation 1. Jane can purchase a share of Microsoft stock from Smith Barney or Schwab. There is no difference in the price of the product. 2. GM, Ford and Chrysler comprise 80% of the market share for automobiles. 3. It is nearly impossible to compete with the NFL. 4. In the market for cell phones, there are a number of different companies to select from. 5. OPEC controls the world s supply of oil. 6. Cilantros offers free meals to children under Publix uses the slogan, where shopping is a pleasure, to differentiate their products. 8. Microsoft used its market power

13 Statement Concept (s) Explanation 1. Jane can purchase a share of Microsoft stock from Smith Barney or Schwab. There is no difference in the price of the product. 2. GM, Ford and Chrysler comprise 80% of the market share for automobiles. 3. It is nearly impossible to compete with the NFL. 4. In the market for cell phones, there are a number of different companies to select from. 5. OPEC controls the world s supply of oil. 6. Cilantros offers free meals to children under Publix uses the slogan, where shopping is a pleasure, to differentiate their products. 8. Microsoft used its market Perfect In a perfectly competitive market, there is no difference in product

14 Statement Concept (s) Explanation 1. Jane can purchase a share of Microsoft stock from Smith Barney or Schwab. There is no difference in the price of the product. 2. GM, Ford and Chrysler comprise 80% of the market share for automobiles. 3. It is nearly impossible to compete with the NFL. 4. In the market for cell phones, there are a number of different companies to select from. 5. OPEC controls the world s supply of oil. 6. Cilantros offers free meals to children under Publix uses the slogan, where shopping is a pleasure, to differentiate their products. 8. Microsoft used its market Perfect Oligopoly In a perfectly competitive market, there is no difference in product Oligopolies exist when a few companies have market power

15 Statement Concept (s) Explanation 1. Jane can purchase a share of Microsoft stock from Smith Barney or Schwab. There is no difference in the price of the product. 2. GM, Ford and Chrysler comprise 80% of the market share for automobiles. 3. It is nearly impossible to compete with the NFL. 4. In the market for cell phones, there are a number of different companies to select from. 5. OPEC controls the world s supply of oil. 6. Cilantros offers free meals to children under Publix uses the slogan, where shopping is a pleasure, to differentiate their products. Perfect In a perfectly competitive market, there is no difference in product Oligopoly Oligopolies exist when 2-3 companies have market power Monopoly A monopoly exists when one company has market power

16 Statement Concept (s) Explanation 1. Jane can purchase a share of Microsoft stock from Smith Barney or Schwab. There is no difference in the price of the product. 2. GM, Ford and Chrysler comprise 80% of the market share for automobiles. 3. It is nearly impossible to compete with the NFL. 4. In the market for cell phones, there are a number of different companies to select from. 5. OPEC controls the world s supply of oil. 6. Cilantros offers free meals to children under Publix uses the slogan, where shopping is a pleasure, to Perfect In a perfectly competitive market, there is no difference in product Oligopoly Oligopolies exist when 2-3 companies have market power Monopoly Monopolistic A monopoly exists when one company has market power In a monopolistically competitive market, there are a range of similar, but different products

17 Statement Concept (s) Explanation 1. Jane can purchase a share of Microsoft stock from Smith Barney or Schwab. There is no difference in the price of the product. 2. GM, Ford and Chrysler comprise 80% of the market share for 3. It is nearly impossible to compete with the NFL. 4. In the market for cell phones, there are a number of different companies to select from. 5. OPEC controls the world s supply of oil. 6. Cilantros offers free meals to children under Publix uses the slogan, where shopping is a pleasure, to differentiate their products. 8. Microsoft used its market power to illegally force companies to not Perfect In a perfectly competitive market, there is no difference in product Oligopoly Oligopolies exist when 2-3 companies have market power Monopoly Monopolistic Cartel, Collusion, Pricefixing A monopoly exists when one company has market power In a monopolistically competitive market, there are a range of similar, but different products Cartels form when several businesses collude to control prices

18 Statement Concept (s) Explanation 1. Jane can purchase a share of Microsoft stock from Smith Barney or Schwab. There is no difference in the price of the product. 2. GM, Ford and Chrysler comprise 80% of the market share for 3. It is nearly impossible to compete with the NFL. 4. In the market for cell phones, there are a number of different companies to select from. 5. OPEC controls the world s supply of oil. 6. Cilantros offers free meals to children under Publix uses the slogan, where shopping is a pleasure, to differentiate their products. Perfect In a perfectly competitive market, there is no difference in product Oligopoly Oligopolies exist when 2-3 companies have market power Monopoly Monopolistic Cartel, Collusion, Pricefixing Price Discrimination A monopoly exists when one company has market power In a monopolistically competitive market, there are a range of similar, but different products Cartels form when several businesses collude to control prices When companies adjust prices based on the consumer to give the incentive to consume

19 Statement Concept (s) Explanation 1. Jane can purchase a share of Microsoft stock from Smith Barney or Schwab. There is no difference in the price of the product. 2. GM, Ford and Chrysler comprise 80% of the market share for 3. It is nearly impossible to compete with the NFL. 4. In the market for cell phones, there are a number of different companies to select from. 5. OPEC controls the world s supply of oil. 6. Cilantros offers free meals to children under Publix uses the slogan, where shopping is a pleasure, to differentiate their products. Perfect In a perfectly competitive market, there is no difference in product Oligopoly Oligopolies exist when 2-3 companies have market power Monopoly Monopolistic Cartel, Collusion, Pricefixing Price Discrimination Non-Price A monopoly exists when one company has market power In a monopolistically competitive market, there are a range of similar, but different products Cartels form when several businesses collude to control prices When companies adjust prices based on the consumer to give the incentive to consume Publix uses service levels to differentiate their product

20 Statement Concept (s) Explanation 1. Jane can purchase a share of Microsoft stock from Smith Barney or Schwab. There is no difference in the price of the product. 2. GM, Ford and Chrysler comprise 80% of the market share for 3. It is nearly impossible to compete with the NFL. 4. In the market for cell phones, there are a number of different companies to select from. 5. OPEC controls the world s supply of oil. 6. Cilantros offers free meals to children under Publix uses the slogan, where shopping is a pleasure, to differentiate their products. Perfect In a perfectly competitive market, there is no difference in product Oligopoly Oligopolies exist when 2-3 companies have market power Monopoly Monopolistic Cartel, Collusion, Pricefixing Price Discrimination Non-Price A monopoly exists when one company has market power In a monopolistically competitive market, there are a range of similar, but different products Cartels form when several businesses collude to control prices When companies adjust prices based on the consumer to give the incentive to consume Publix uses service levels to differentiate their product

21 Perfect Monopolistic Oligopoly Monopoly Number of Firms Variety of Goods Control Over Prices Barriers to Entry Examples

22 Perfect Monopolistic Oligopoly Monopoly Number of Firms Many Many A few dominate One Variety of Goods Control Over Prices Barriers to Entry Examples

23 Perfect Monopolistic Oligopoly Monopoly Number of Firms Many Many A few dominate One Variety of Goods None Some Some None Control Over Prices Barriers to Entry Examples

24 Perfect Monopolistic Oligopoly Monopoly Number of Firms Many Many A few dominate One Variety of Goods Control Over Prices None Some Some None None Little Some Complete Barriers to Entry Examples

25 Perfect Monopolistic Oligopoly Monopoly Number of Firms Many Many A few dominate One Variety of Goods Control Over Prices Barriers to Entry None Some Some None None Little Some Complete None Low High Complete Examples

26 Perfect Monopolistic Oligopoly Monopoly Number of Firms Many Many A few dominate One Variety of Goods Control Over Prices Barriers to Entry None Some Some None None Little Some Complete None Low High Complete Examples Agriculture, Stocks Jeans, Fast Food, Cell Phone Companies Automobile Industry, Beer Industry Microsoft, NFL

Perfect competition is a market structure in which a large number of firms all produce the same product.

Perfect competition is a market structure in which a large number of firms all produce the same product. The Four Conditions for Perfect Competition Perfect competition is a market structure in which a large number of firms all produce the same product. 1. Many Buyers and Sellers There are many participants

More information

Economics Chapter 7 Market Structures. Perfect competition is a in which a large number of all produce.

Economics Chapter 7 Market Structures. Perfect competition is a in which a large number of all produce. Economics Chapter 7 Market Structures Perfect competition is a in which a large number of all produce. There are Four Conditions for Perfect Competition: 1. 2. 3. 4. Barriers to Entry Factors that make

More information

Perfect Competition. Chapter 7 Section Main Menu

Perfect Competition. Chapter 7 Section Main Menu Perfect Competition What conditions must exist for perfect competition? What are barriers to entry and how do they affect the marketplace? What are prices and output like in a perfectly competitive market?

More information

Chapter 7: Market Structures Section 3

Chapter 7: Market Structures Section 3 Chapter 7: Market Structures Section 3 Objectives 1. Describe characteristics and give examples of monopolistic competition. 2. Explain how firms compete without lowering prices. 3. Understand how firms

More information

Chapter 7: Market Structures Section 1

Chapter 7: Market Structures Section 1 Chapter 7: Market Structures Section 1 Key Terms perfect competition: a market structure in which a large number of firms all produce the same product and no single seller controls supply or prices commodity:

More information

Economics Chapter 7 Review

Economics Chapter 7 Review Name: Class: Date: ID: A Economics Chapter 7 Review Matching a. perfect competition e. imperfect competition b. efficiency f. price and output c. start-up costs g. technological barrier d. commodity h.

More information

Models of Imperfect Competition

Models of Imperfect Competition Models of Imperfect Competition Monopolistic Competition Oligopoly Models of Imperfect Competition So far, we have discussed two forms of market competition that are difficult to observe in practice Perfect

More information

Characteristics of Market Structure PERFECT COMPETITION MONOPOLISITC COMPETITION

Characteristics of Market Structure PERFECT COMPETITION MONOPOLISITC COMPETITION Characteristics of Market Structure Place on each wall of the classroom a large sign with one of the following market structures: PERFECT COMPETITION MONOPOLISITC COMPETITION MONOPOLY OLIGOPOLY There are

More information

Exam No. 3 Date: 7 or 9 May Instructor: Brian B. Young

Exam No. 3 Date: 7 or 9 May Instructor: Brian B. Young Economics 212 Microeconomic Principles Exam No. 3 Date: 7 or 9 May 2012 Name The value of this exam is 100 points Instructor: Brian B. Young Please show your work where appropriate! Multiple Choice 2 points

More information

A seller who can only sell his or her goods at the equilibrium price.

A seller who can only sell his or her goods at the equilibrium price. Chapter 8, Section 1 A Perfectly Competitive Market What are the four characteristics of a perfectly competitive market? 1. Many buyers and sellers 2. All firms sell identical goods 3. Buyers and sellers

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Exam Four - Sample Questions Chapters 12-14 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) What is the difference between perfect competition

More information

This hand-out gives an overview of the main market structures including perfect competition, monopoly, monopolistic competition, and oligopoly.

This hand-out gives an overview of the main market structures including perfect competition, monopoly, monopolistic competition, and oligopoly. Market Structures This hand-out gives an overview of the main market structures including perfect competition, monopoly, monopolistic competition, and oligopoly. Summary Chart Perfect Competition Monopoly

More information

Micro Chapter 11 Study Guide Questions

Micro Chapter 11 Study Guide Questions Micro Chapter 11 Study Guide Questions Multiple Choice Identify the choice that best completes the statement or answers the question. 1. A monopoly is best defined as a. a single seller of a product that

More information

Competition and Market Structure

Competition and Market Structure Competition and Market Structure Market Structure MARKET STRUCTURE- nature and degree of competition that exist in an industry or market There are five different types of market structures Pure Competition

More information

Table: Characteristics of Market Structures

Table: Characteristics of Market Structures Oligopolies Part I It's called an oligopoly. It's not a regular market. It's a market in which they control the prices and they've been doing it for years. Richard Miller Market Structure We classify firms

More information

difficult to detect; barriers to entry are low; market demand conditions are unstable; and anti-trust action is vigorous. If we are talking about an

difficult to detect; barriers to entry are low; market demand conditions are unstable; and anti-trust action is vigorous. If we are talking about an OLIGOPOLY We have thus far observed that a certain portion of our market is characterized as competitive, monopolistically competitive and monopolies. However, we also know that some firms that exist today

More information

Comparisons of Industry Market Structures. Imperfect Competition Market Structure Models (11/10/09)

Comparisons of Industry Market Structures. Imperfect Competition Market Structure Models (11/10/09) Imperfect Market Structure Models (11/10/09) Today: and Monopsony/Oligopsony Thursday: Market Structure, Conduct and erformance Model Exam III 24 th Characteristics Comparisons of Industry Market Structures

More information

Market Structures. [How many sellers in each industry]

Market Structures. [How many sellers in each industry] Market Structures [How many sellers in each industry] Competition economic rivalry among businesses. Market Structure degree of competition among firms operating in the same market (autos). Perfect Competition

More information

CHAPTER 12 MARKETS WITH MARKET POWER Microeconomics in Context (Goodwin, et al.), 2 nd Edition

CHAPTER 12 MARKETS WITH MARKET POWER Microeconomics in Context (Goodwin, et al.), 2 nd Edition CHAPTER 12 MARKETS WITH MARKET POWER Microeconomics in Context (Goodwin, et al.), 2 nd Edition Chapter Summary Now that you understand the model of a perfectly competitive market, this chapter complicates

More information

Chapter 6 Lecture. Market Structures

Chapter 6 Lecture. Market Structures Chapter 6 Lecture Market Structures Market Structures Two basic types of markets (1) Highly competitive markets Example is the jeans market A large selection of producers & high demand (2) Imperfectly

More information

Oligopoly: Firms in Less Competitive Markets

Oligopoly: Firms in Less Competitive Markets Chapter 13 Oligopoly: Firms in Less Competitive Markets Prepared by: Fernando & Yvonn Quijano 2008 Prentice Hall Business Publishing Economics R. Glenn Hubbard, Anthony Patrick O Brien, 2e. Competing with

More information

Oligopoly. Unit 4: Imperfect Competition. Unit 4: Imperfect Competition 4-4. Oligopolies FOUR MARKET MODELS

Oligopoly. Unit 4: Imperfect Competition. Unit 4: Imperfect Competition 4-4. Oligopolies FOUR MARKET MODELS 1 Unit 4: Imperfect Competition FOUR MARKET MODELS Perfect Competition Monopolistic Competition Pure Characteristics of Oligopolies: A Few Large Producers (Less than 10) Identical or Differentiated Products

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Economics 103 Spring 2012: Multiple choice review questions for final exam. Exam will cover chapters on perfect competition, monopoly, monopolistic competition and oligopoly up to the Nash equilibrium

More information

Cooleconomics.com Monopolistic Competition and Oligopoly. Contents:

Cooleconomics.com Monopolistic Competition and Oligopoly. Contents: Cooleconomics.com Monopolistic Competition and Oligopoly Contents: Monopolistic Competition Attributes Short Run performance Long run performance Excess capacity Importance of Advertising Socialist Critique

More information

Extreme cases. In between cases

Extreme cases. In between cases CHAPTER 16 OLIGOPOLY FOUR TYPES OF MARKET STRUCTURE Extreme cases PERFECTLY COMPETITION Many firms No barriers to entry Identical products MONOPOLY One firm Huge barriers to entry Unique product In between

More information

Common in European countries government runs telephone, water, electric companies.

Common in European countries government runs telephone, water, electric companies. Public ownership Common in European countries government runs telephone, water, electric companies. US: Postal service. Because delivery of mail seems to be natural monopoly. Private ownership incentive

More information

OLIGOPOLY. Nature of Oligopoly. What Causes Oligopoly?

OLIGOPOLY. Nature of Oligopoly. What Causes Oligopoly? CH 11: OLIGOPOLY 1 OLIGOPOLY When a few big firms dominate the market, the situation is called oligopoly. Any action of one firm will affect the performance of other firms. If one of the firms reduces

More information

Monopolistic Competition

Monopolistic Competition Monopolistic Chapter 17 Copyright 2001 by Harcourt, Inc. All rights reserved. Requests for permission to make copies of any part of the work should be mailed to: Permissions Department, Harcourt College

More information

Variable Cost. Marginal Cost. Average Variable Cost 0 $50 $50 $0 -- -- -- -- 1 $150 A B C D E F 2 G H I $120 J K L 3 M N O P Q $120 R

Variable Cost. Marginal Cost. Average Variable Cost 0 $50 $50 $0 -- -- -- -- 1 $150 A B C D E F 2 G H I $120 J K L 3 M N O P Q $120 R Class: Date: ID: A Principles Fall 2013 Midterm 3 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Trevor s Tire Company produced and sold 500 tires. The

More information

A Duopoly Example A duopoly is an oligopoly with only two members. It is the simplest type of oligopoly. Table 1 The Demand Schedule for Water

A Duopoly Example A duopoly is an oligopoly with only two members. It is the simplest type of oligopoly. Table 1 The Demand Schedule for Water In this chapter, look for the answers to these questions: What market structures lie between perfect competition and monopoly, and what are their characteristics? What outcomes are possible under oligopoly?

More information

C H A P T E R 12. Monopolistic Competition and Oligopoly CHAPTER OUTLINE

C H A P T E R 12. Monopolistic Competition and Oligopoly CHAPTER OUTLINE C H A P T E R 12 Monopolistic Competition and Oligopoly CHAPTER OUTLINE 12.1 Monopolistic Competition 12.2 Oligopoly 12.3 Price Competition 12.4 Competition versus Collusion: The Prisoners Dilemma 12.5

More information

ECON101 STUDY GUIDE 7 CHAPTER 14

ECON101 STUDY GUIDE 7 CHAPTER 14 ECON101 STUDY GUIDE 7 CHAPTER 14 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) An oligopoly firm is similar to a monopolistically competitive

More information

UNIT 6 cont PRICING UNDER DIFFERENT MARKET STRUCTURES. Monopolistic Competition

UNIT 6 cont PRICING UNDER DIFFERENT MARKET STRUCTURES. Monopolistic Competition UNIT 6 cont PRICING UNDER DIFFERENT MARKET STRUCTURES Monopolistic Competition Market Structure Perfect Competition Pure Monopoly Monopolistic Competition Oligopoly Duopoly Monopoly The further right on

More information

How Does A Monopolistically Competitive Market Function?

How Does A Monopolistically Competitive Market Function? How Does A Monopolistically Competitive Market Function? Perfect Competition Monopolistic Competition Oligopoly Pure Monopoly I. Characteristics of Monopolistic Competition: Relatively Large Number of

More information

Figure: Computing Monopoly Profit

Figure: Computing Monopoly Profit Name: Date: 1. Most electric, gas, and water companies are examples of: A) unregulated monopolies. B) natural monopolies. C) restricted-input monopolies. D) sunk-cost monopolies. Use the following to answer

More information

Narsee Monjee Institute of Management Studies NMIMS University. Market Structure Analysis: III. Dipankar De Mumbai, September 2007

Narsee Monjee Institute of Management Studies NMIMS University. Market Structure Analysis: III. Dipankar De Mumbai, September 2007 Narsee Monjee Institute of Management Studies NMIMS University Market Structure Analysis: III Dipankar De Mumbai, September 2007 1 Monopolistic Competition A market in which firms compete by selling differentiated

More information

Chapter 05 Perfect Competition, Monopoly, and Economic

Chapter 05 Perfect Competition, Monopoly, and Economic Chapter 05 Perfect Competition, Monopoly, and Economic Multiple Choice Questions Use Figure 5.1 to answer questions 1-2: Figure 5.1 1. In Figure 5.1 above, what output would a perfect competitor produce?

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Chap 13 Monopolistic Competition and Oligopoly These questions may include topics that were not covered in class and may not be on the exam. MULTIPLE CHOICE. Choose the one alternative that best completes

More information

Econ 111 (04) 2nd Midterm A

Econ 111 (04) 2nd Midterm A Econ 111 (04) 2nd Midterm A MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which one of the following does not occur in perfect competition? A)

More information

Chapter 11: Price-Searcher Markets with High Entry Barriers

Chapter 11: Price-Searcher Markets with High Entry Barriers Chapter 11: Price-Searcher Markets with High Entry Barriers I. Why are entry barriers sometimes high? A. Economies of Scale in some markets average total costs fall over the full range of output. Therefore

More information

CHAPTER 18 MARKETS WITH MARKET POWER Principles of Economics in Context (Goodwin et al.)

CHAPTER 18 MARKETS WITH MARKET POWER Principles of Economics in Context (Goodwin et al.) CHAPTER 18 MARKETS WITH MARKET POWER Principles of Economics in Context (Goodwin et al.) Chapter Summary Now that you understand the model of a perfectly competitive market, this chapter complicates the

More information

Market Structure: Oligopoly (Imperfect Competition)

Market Structure: Oligopoly (Imperfect Competition) Market Structure: Oligopoly (Imperfect Competition) I. Characteristics of Imperfectly Competitive Industries A. Monopolistic Competition large number of potential buyers and sellers differentiated product

More information

Business Ethics Concepts & Cases

Business Ethics Concepts & Cases Business Ethics Concepts & Cases Manuel G. Velasquez Chapter Four Ethics in the Marketplace Definition of Market A forum in which people come together to exchange ownership of goods; a place where goods

More information

Oligopoly. Models of Oligopoly Behavior No single general model of oligopoly behavior exists. Oligopoly. Interdependence.

Oligopoly. Models of Oligopoly Behavior No single general model of oligopoly behavior exists. Oligopoly. Interdependence. Oligopoly Chapter 16-2 Models of Oligopoly Behavior No single general model of oligopoly behavior exists. Oligopoly An oligopoly is a market structure characterized by: Few firms Either standardized or

More information

Imperfect Competition. Oligopoly. Types of Imperfectly Competitive Markets. Imperfect Competition. Markets With Only a Few Sellers

Imperfect Competition. Oligopoly. Types of Imperfectly Competitive Markets. Imperfect Competition. Markets With Only a Few Sellers Imperfect Competition Oligopoly Chapter 16 Imperfect competition refers to those market structures that fall between perfect competition and pure monopoly. Copyright 2001 by Harcourt, Inc. All rights reserved.

More information

So far, you have studied the two extremes

So far, you have studied the two extremes Chapter Monopolistic Competition and Objectives You may wish to call students attention to the objectives in the Section Preview. The objectives are reflected in the main headings of the section. Bellringer

More information

Chapter 16 Pricing Concepts and Strategies

Chapter 16 Pricing Concepts and Strategies Chapter 16 Pricing Concepts and Strategies Learning Objective 01 Pricing Objectives and the Marketing Mix Pricing Objectives FOR Profit Organizations Pricing Objectives NOT- FOR Profit Organizations Objective

More information

Chapter 16 Monopolistic Competition and Oligopoly

Chapter 16 Monopolistic Competition and Oligopoly Chapter 16 Monopolistic Competition and Oligopoly Market Structure Market structure refers to the physical characteristics of the market within which firms interact It is determined by the number of firms

More information

Teaching- Learning Material

Teaching- Learning Material STATE COUNCIL OF EDUCATIONAL RESEARCH &TRAINING VARUN MARG, DEFENCE COLONY, NEW DELHI Teaching- Learning Material (On the basis of weekly syllabus for the Month of July 2011) For Class XII PGT (Economics)

More information

1. Supply and demand are the most important concepts in economics.

1. Supply and demand are the most important concepts in economics. Page 1 1. Supply and demand are the most important concepts in economics. 2. Markets and Competition a. Market is a group of buyers and sellers of a particular good or service. P. 66. b. These individuals

More information

Ecn 221 - Unit 10 Monopolistic Competition & Oligopoly

Ecn 221 - Unit 10 Monopolistic Competition & Oligopoly Ecn 221 - Unit 10 Monopolistic Competition & Oligopoly An industry characterized by monopolistic competition is similar to the case of perfect competition in that there are many firms, and entry into the

More information

Chapter 2 Market Structure, Types and Segmentation

Chapter 2 Market Structure, Types and Segmentation Market Structure There are a variety of differing market structures which are separated by the levels of competition that exist within each market and the market conditions in which the businesses operate.

More information

CHAPTER 11: MONOPOLISTIC COMPETITION AND OLIGOPOLY

CHAPTER 11: MONOPOLISTIC COMPETITION AND OLIGOPOLY CHAPTER 11: MONOPOLISTIC COMPETITION AND OLIGOPOLY Introduction While perfect competition and monopoly represent the extremes of market structures, most American firms are found in the two market structures

More information

12 Monopolistic Competition and Oligopoly

12 Monopolistic Competition and Oligopoly 12 Monopolistic Competition and Oligopoly Read Pindyck and Rubinfeld (2012), Chapter 12 09/04/2015 CHAPTER 12 OUTLINE 12.1 Monopolistic Competition 12.2 Oligopoly 12.3 Price Competition 12.4 Competition

More information

Monopolistic Competition

Monopolistic Competition In this chapter, look for the answers to these questions: How is similar to perfect? How is it similar to monopoly? How do ally competitive firms choose price and? Do they earn economic profit? In what

More information

Northern University Bangladesh

Northern University Bangladesh Northern University Bangladesh Managerial Economics ( MBA 5208) Session # 09 Oligopoly & Monopolistic Competition Prof. Mahmudul Alam (PMA) 23 September, 2011 (Friday) 1 1. Monopolistic Competition & Oligopoly

More information

5. Suppose demand is perfectly elastic, and the supply of the good in question

5. Suppose demand is perfectly elastic, and the supply of the good in question ECON 1620 Basic Economics Principles 2010 2011 2 nd Semester Mid term test (1) : 40 multiple choice questions Time allowed : 60 minutes 1. When demand is inelastic the price elasticity of demand is (A)

More information

Chapter 7 Monopoly and Oligopoly

Chapter 7 Monopoly and Oligopoly Chapter 7 Monopoly and Oligopoly Multiple Choice Questions Choose the one alternative that best completes the statement or answers the question. 1. Assume that in order to sell 10 more units of output

More information

T28 OLIGOPOLY 3/1/15

T28 OLIGOPOLY 3/1/15 T28 OLIGOPOLY 3/1/15 1. Oligopoly is a market structure in which there are a small number of firms that engage in strategic interactions. If there are only two firms then we refer to the situation as a

More information

Describe the characteristics of different market structures: perfect competition, monopolistic competition, oligopoly, and pure monopoly

Describe the characteristics of different market structures: perfect competition, monopolistic competition, oligopoly, and pure monopoly www.edupristine.com Describe the characteristics of different market structures: perfect competition, monopolistic competition, oligopoly, and pure monopoly Prerequisite Characteristics of different market

More information

Learning Objectives. Chapter 6. Market Structures. Market Structures (cont.) The Two Extremes: Perfect Competition and Pure Monopoly

Learning Objectives. Chapter 6. Market Structures. Market Structures (cont.) The Two Extremes: Perfect Competition and Pure Monopoly Chapter 6 The Two Extremes: Perfect Competition and Pure Monopoly Learning Objectives List the four characteristics of a perfectly competitive market. Describe how a perfect competitor makes the decision

More information

LECTURE #15: MICROECONOMICS CHAPTER 17

LECTURE #15: MICROECONOMICS CHAPTER 17 LECTURE #15: MICROECONOMICS CHAPTER 17 I. IMPORTANT DEFINITIONS A. Oligopoly: a market structure with a few sellers offering similar or identical products. B. Game Theory: the study of how people behave

More information

Model of Imperfect Competition

Model of Imperfect Competition C H A P T E R T H I R T E E N C o n s t r u c t i n g a m o d e l o f i m p e r f e c t c o m p e t i t i o n Model of Imperfect Competition Suppose you were contacted by a businessman who was interested

More information

MODULE 64: INTRODUCTION TO OLIGOPOLY Schmidty School of Economics. Wednesday, December 4, 2013 9:20:15 PM Central Standard Time

MODULE 64: INTRODUCTION TO OLIGOPOLY Schmidty School of Economics. Wednesday, December 4, 2013 9:20:15 PM Central Standard Time MODULE 64: INTRODUCTION TO OLIGOPOLY Schmidty School of Economics Learning Targets I Can Understand why oligopolists have an incentive to act in ways that reduce their combined profit. Explain why oligopolies

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. MBA 640, Survey of Microeconomics Fall 2006, Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The "law of demand" states that, other

More information

Basics of Industrial Organization and Competition Policy

Basics of Industrial Organization and Competition Policy Basics of Industrial Organization and Competition Policy What is Industrial Organization? S-C-P Paradigm Alternative Thoughts and Theories Why competition is regarded as important in our economy What is

More information

Chapter 14. Oligopoly and Monopolistic Competition. Anyone can win unless there happens to be a second entry. George Ade

Chapter 14. Oligopoly and Monopolistic Competition. Anyone can win unless there happens to be a second entry. George Ade Chapter 14 Oligopoly and Monopolistic Competition Anyone can win unless there happens to be a second entry. George Ade Chapter 14 Outline 14.1 Market Structures 14.2 Cartels 14.3 Noncooperative Oligopoly

More information

Microeconomics. Lecture Outline. Claudia Vogel. Winter Term 2009/2010. Part III Market Structure and Competitive Strategy

Microeconomics. Lecture Outline. Claudia Vogel. Winter Term 2009/2010. Part III Market Structure and Competitive Strategy Microeconomics Claudia Vogel EUV Winter Term 2009/2010 Claudia Vogel (EUV) Microeconomics Winter Term 2009/2010 1 / 25 Lecture Outline Part III Market Structure and Competitive Strategy 12 Monopolistic

More information

Oligopoly and Strategic Behavior

Oligopoly and Strategic Behavior Oligopoly and Strategic Behavior MULTIPLE-CHOICE QUESTIONS Like a pure monopoly, an oligopoly is characterized by: a. free entry and exit in the long run. b. free entry and exit in the short run. c. significant

More information

Monopolistic Competition

Monopolistic Competition Monopolistic Competition and Product ifferentiation Outline for Lectures 19 and 20. Read Chapter 12 and the assigned class reading. Announcements What is Monopolistic Competition? Why oligopolists and

More information

The Big Picture. Perfect Competition CHAPTER 14 SUMMARY CHAPTER 15 SUMMARY. Firms in Competitive Markets

The Big Picture. Perfect Competition CHAPTER 14 SUMMARY CHAPTER 15 SUMMARY. Firms in Competitive Markets The Big Picture Chapter 13: The cost of production Chapter 14-17:Look at firm s revenue But revenue depends on market structure 1. Competitive market (chapter 14) 2. Monopoly (chapter 15) 3. Oligopoly

More information

Chapter 8 Production Technology and Costs 8.1 Economic Costs and Economic Profit

Chapter 8 Production Technology and Costs 8.1 Economic Costs and Economic Profit Chapter 8 Production Technology and Costs 8.1 Economic Costs and Economic Profit 1) Accountants include costs as part of a firm's costs, while economists include costs. A) explicit; no explicit B) implicit;

More information

BASIC MARKET ELEMENTS. Supply Demand Price Competition

BASIC MARKET ELEMENTS. Supply Demand Price Competition BASIC MARKET ELEMENTS Supply Demand Price Competition Supply Supply is the quantity of goods that firms are willing to produce and sale with respect to the market price when all other conditions (like

More information

Learning Objectives. Chapter 7. Characteristics of Monopolistic Competition. Monopolistic Competition. In Between the Extremes: Imperfect Competition

Learning Objectives. Chapter 7. Characteristics of Monopolistic Competition. Monopolistic Competition. In Between the Extremes: Imperfect Competition Chapter 7 In Between the Extremes: Imperfect Competition Learning Objectives List the five conditions that must be met for the existence of monopolistic competition. Describe the methods that firms can

More information

Oligopoly. Oligopoly is a market structure in which the number of sellers is small.

Oligopoly. Oligopoly is a market structure in which the number of sellers is small. Oligopoly Oligopoly is a market structure in which the number of sellers is small. Oligopoly requires strategic thinking, unlike perfect competition, monopoly, and monopolistic competition. Under perfect

More information

Final Exam (Version 1) Answers

Final Exam (Version 1) Answers Final Exam Economics 101 Fall 2003 Wallace Final Exam (Version 1) Answers 1. The marginal revenue product equals A) total revenue divided by total product (output). B) marginal revenue divided by marginal

More information

Monopoly, Oligopoly, and Monopolistic Competition. Chapter 8. Learning Objectives

Monopoly, Oligopoly, and Monopolistic Competition. Chapter 8. Learning Objectives Monopoly, Oligopoly, and Monopolistic Competition Chapter 8 McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives 1. Distinguish among three types

More information

Oligopoly and Game Theory

Oligopoly and Game Theory Chapter 15 MODERN PRINCIPLES OF ECONOMICS Third Edition Oligopoly and Game Theory Outline Cartels The Prisoner s Dilemma Oligopolies When Are Cartels and Oligopolies Most Successful? Government Policy

More information

Pre-Test Chapter 23 ed17

Pre-Test Chapter 23 ed17 Pre-Test Chapter 23 ed17 Multiple Choice Questions 1. The kinked-demand curve model of oligopoly: A. assumes a firm's rivals will ignore a price cut but match a price increase. B. embodies the possibility

More information

chapter: Oligopoly Krugman/Wells Economics 2009 Worth Publishers 1 of 35

chapter: Oligopoly Krugman/Wells Economics 2009 Worth Publishers 1 of 35 chapter: 15 >> Oligopoly Krugman/Wells Economics 2009 Worth Publishers 1 of 35 WHAT YOU WILL LEARN IN THIS CHAPTER The meaning of oligopoly, and why it occurs Why oligopolists have an incentive to act

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Test 2 Review Econ 201, V. Tremblay MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Barbara left a $25,000 job as an architect to run a catering

More information

chapter: Solution Oligopoly 1. The accompanying table presents market share data for the U.S. breakfast cereal market

chapter: Solution Oligopoly 1. The accompanying table presents market share data for the U.S. breakfast cereal market S209-S220_Krugman2e_PS_Ch15.qxp 9/16/08 9:23 PM Page S-209 Oligopoly chapter: 15 1. The accompanying table presents market share data for the U.S. breakfast cereal market in 2006. Company a. Use the data

More information

PREPARING FOR PAPER 2

PREPARING FOR PAPER 2 PREPARING FOR PAPER 2 Checklist Paper 2 consists of the following: Micro-Economics Perfect markets Imperfect markets Market failures Contemporary Economic Issues Inflation Tourism Environmental sustainability

More information

UNIVERSITY OF CALICUT MICRO ECONOMICS - II

UNIVERSITY OF CALICUT MICRO ECONOMICS - II UNIVERSITY OF CALICUT SCHOOL OF DISTANCE EDUCATION BA ECONOMICS III SEMESTER CORE COURSE (2011 Admission onwards) MICRO ECONOMICS - II QUESTION BANK 1. Which of the following industry is most closely approximates

More information

Quick Review. Chapter 15: Figure 1 The Four Types of Market Structure

Quick Review. Chapter 15: Figure 1 The Four Types of Market Structure Chapter 16: Oligopoly Imperfect competition refers to those market structures that fall between perfect competition and pure monopoly and do not face so much competition that they are price takers. Types

More information

WELCOME TO THE REAL WORLD OF MONOPOLISTIC COMPETITION AND OLIGOPOLY

WELCOME TO THE REAL WORLD OF MONOPOLISTIC COMPETITION AND OLIGOPOLY WELCOME TO THE REAL WORLD OF MONOPOLISTIC COMPETITION AND OLIGOPOLY Perfect Competition Monopolistic Competition Oligopoly Monopoly THE MAJORITY OF CANADIAN INDUSTRIES DO NOT QUALIFY AS "PERFECTLY COMPETITIVE"

More information

As you move your cart down the grocery isle, stop in front of the canned soups. You see before maybe four or five different brands of soup.

As you move your cart down the grocery isle, stop in front of the canned soups. You see before maybe four or five different brands of soup. 1Oligopoly 19 As you move your cart down the grocery isle, stop in front of the canned soups. You see before maybe four or five different brands of soup. If you stop in front of the frozen pizzas you might

More information

Directions: This problem set is graded. Feel free to ask me questions. Turn your answers in on the provided scantron form.

Directions: This problem set is graded. Feel free to ask me questions. Turn your answers in on the provided scantron form. Micro Problem Set III WCC Winter 2015 Directions: This problem set is graded. Feel free to ask me questions. Turn your answers in on the provided scantron form. A=True / B=False 20 Points 1) If price is

More information

Bertrand with complements

Bertrand with complements Microeconomics, 2 nd Edition David Besanko and Ron Braeutigam Chapter 13: Market Structure and Competition Prepared by Katharine Rockett Dieter Balkenborg Todd Kaplan Miguel Fonseca Bertrand with complements

More information

4. Market Structures. Learning Objectives 4-63. Market Structures

4. Market Structures. Learning Objectives 4-63. Market Structures 1. Supply and Demand: Introduction 3 2. Supply and Demand: Consumer Demand 33 3. Supply and Demand: Company Analysis 43 4. Market Structures 63 5. Key Formulas 81 2014 Allen Resources, Inc. All rights

More information

Eco 340 Industrial Economics Market Structures: Cartels / Cooperative Oligopoly. Prof Dr. Murat Yulek

Eco 340 Industrial Economics Market Structures: Cartels / Cooperative Oligopoly. Prof Dr. Murat Yulek Eco 340 Industrial Economics Market Structures: Cartels / Cooperative Oligopoly Prof Dr. Murat Yulek Oligopolistic Markets and the Cartel Competitive market: firms operate independently In other markets,

More information

Other Market Structures

Other Market Structures SECTION 3 Other Market Structures OBJECTIVES KEY TERMS TAKING NOTES In Section 3, you will learn that monopolistic competition and oligopoly are market structures that fall between perfect competition

More information

The notion of perfect competition for consumers and producers, and the role of price flexibility in such a context. Ezees Silwady

The notion of perfect competition for consumers and producers, and the role of price flexibility in such a context. Ezees Silwady The notion of perfect competition for consumers and producers, and the role of price flexibility in such a context Ezees Silwady I. Introduction The aim of this paper is to clarify the notion of perfect

More information

Market Structure. Market Structure and Behaviour. Perfect competition. PC firm output

Market Structure. Market Structure and Behaviour. Perfect competition. PC firm output Market Structure Market Structure and Behaviour See chapters 10-12 in Mansfield et al Market: firms and individuals buy and sell Important social and legal preconditions Different structures depending

More information

BMME5103 Answer Scheme (Nov 2011) Part A ANSWER

BMME5103 Answer Scheme (Nov 2011) Part A ANSWER BMME5103 Answer Scheme (Nov 2011) Part A Question 1 a) The New York Times (Nov. 30, 1993) reported that the inability of OPEC to agree last week to cut production has sent the oil market into turmoil [leading

More information

Chapter 7 Monopoly, Oligopoly and Strategy

Chapter 7 Monopoly, Oligopoly and Strategy Chapter 7 Monopoly, Oligopoly and Strategy After reading Chapter 7, MONOPOLY, OLIGOPOLY AND STRATEGY, you should be able to: Define the characteristics of Monopoly and Oligopoly, and explain why the are

More information

MONOPOLISTIC COMPETITION AND OLIGOPOLY

MONOPOLISTIC COMPETITION AND OLIGOPOLY MONOPOLISTIC COMPETITION AND OLIGOPOLY I. MONOPOLISTIC COMPETITION a. CHARACTERISTICS i. RELATIVELY LARGE NUMBER OF SELLERS 1. Each firm has a relatively small percentage of market share 2. No collusion

More information

Chapter 14. Oligopoly

Chapter 14. Oligopoly Chapter 14. Oligopoly Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 202 504 Principles of Microeconomics Oligopoly Market Oligopoly: A market structure in which a small number

More information

LECTURE #13: MICROECONOMICS CHAPTER 15

LECTURE #13: MICROECONOMICS CHAPTER 15 LECTURE #13: MICROECONOMICS CHAPTER 15 I. WHY MONOPOLIES ARISE A. Competitive firms are price takers; a Monopoly firm is a price maker B. Monopoly: a firm that is the sole seller of a product without close

More information

Practice Questions Week 8 Day 1

Practice Questions Week 8 Day 1 Practice Questions Week 8 Day 1 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. The characteristics of a market that influence the behavior of market participants

More information