Economic Systems and Structures

1. Economic Systems and Structures Unit 7

2. The Four Market Structures Part 1

3. Unwrap the Objectives • Factual: Identify the four market structures • Conceptual: Compare and contrast the four market structures • Communicative: Categorize the four market structures

4. Agenda • Unwrap the Objective • Lecture • Notes • Video Questions • Chart It Out • Check It Out • Essential Question

5. Essential Question If you were a business owner, what market structure would you prefer? If you were a consumer, what structure would you prefer?

6. The Four Market Structures Part 1

7. Video Questions https://www.youtube.com/watch?v=Sb_-wfmJnHA • According to the video what is a pure monopoly? • According to the video why are laws against Monopolies called anti trust laws? • According to the video what is horizontal integration? • According to the video what is vertical integration? • According to the video how long do most patens last? • According to the video what is a natural monopoly? • According to the video what is price discrimination?

8. Video Questions • According to the video what is a pure monopoly? • A Market controlled by one seller with a good or service that has no close substitutes • According to the video why are laws against Monopolies called anti trust laws? • Monopolies used to be called trusts • According to the video what is horizontal integration? • The Act of buying companies that produce similar products • According to the video what is vertical integration? • When a company directly owns or controls its supply chain • According to the video how long do most patens last? • 20 years • According to the video what is a natural monopoly? • When it is more cost effective to have one large producer rather than several smaller competing firms • According to the video what is price discrimination? • Charging different people different prices for the same product or service

9. Perfect Competition • Occurs when there are many sellers • There is easy entry and exiting of firms • Products are identical from one seller to another • Sellers are price takers. • A company that must accept the prevailing prices in the market of its products • The company is unable to affect the market price.

10. Perfect Competition Continued • Size of market • Companies have little control over market because they only own a small part of it • Easy of Entry • It is very easy to enter or exit • Similarity of products • Products are the same in a market • Control of price • Firms have to charge what people or willing to pay even a few cents will cost them all business

11. Monopolistic Competition • Occurs when there are there are many firms that offer similar products • There is easy entry and exiting of firms • Products are nearly identical from one seller to another • Sellers are price setters • The firms or companies set prices. • Companies are able to do this because of uninformed consumers not knowing how the small changes in the product should impact the price

12. Monopolistic Competition Continued • Size of market • Companies have little control over market because they only own a small part of it • Easy of Entry • It is very easy to enter or exit • Similarity of products • Products are nearly the same in a market • Control of price • Firms set prices for products but often have sales to draw attention to their product

13. Oligopoly • Is when there are few firms in a market and they are able to act like a monopoly • Prices are set by a price leader • A firm that is followed by others when it changes the price • New firms need lots of capital to enter the market

14. Oligopoly Continued • Size of market • Companies have a lot of control over market because there are only a few firms in the market • No firm has complete control of the market • Easy of Entry • It is difficult to enter the market because the other firms have so much control • Similarity of products • Products are nearly the same in a market • Control of price • Firms set prices for products like a monopoly • When a price leader changes prices the other firms follow

15. Monopoly • Is when a market is controlled by a single firm • That firm is able to block other firms from entering the market by controlling prices or materials • People must purchase goods from the single source are do without

16. Monopoly • Size of market • A single firm has complete control over the market • Easy of Entry • It is almost impossible to enter the market • Similarity of products • Products are the same in a market • Control of price • A firm sets prices for products

17. Chart It Out Place the following examples (letter only) on line where they belong • Nike and basketball shoes • Entergy in Tangipahoa Parish • Burger king • Google • A new car manufacturer Monopoly Perfect Competition

18. Check It Out In the Space provided describe each market’s control of the four categories.

19. CompetitionConsumers and Producers Part 2

20. Unwrap the Objectives • Factual: Define Producers and Consumers • Conceptual: Explain how competition affects both Producers and consumers • Communicative: Describe how competition impacts prices for consumers

21. Agenda • Unwrap the Objective • Lecture • Notes • You decided • Thought Map • Essential Question

22. Essential Question • How does competition impact consumers?

23. CompetitionConsumers and Producers Part 2

24. Consumers • A person who purchases goods and services for personal use • These are the people that buy things • They also are the people that drive demand • Producers are constantly searching for ways to ensure that consumers spend their money at their firm

25. Producers • A person, company, or country that makes, grows, or supplies goods or commodities for sale • They are the ones that control production in response to consumers demand • They control the supply of goods • They are looking for ways to increase profits

26. Production Efficiency • Production efficiency is an economic level at which the economy can no longer produce additional amounts of a good without lowering the production level of another product • The aim is to find a balance between the use of resources, rate of production and quality of the goods being produced • True production efficiency is only reached when it is not possible to improve performance in one area without doing harm to another. 

27. Quality and Quantity • Quality - The standard of something as measured against other things of a similar kind; the degree of excellence of something. • Quantity - The amount or number of a material or immaterial thing not usually estimated by spatial measurement • In many cases a firm must chose one or the other • Quality generally cost more because better materials and more time is spent in the production • Quantity generally costs less because cheaper materials are used and the supply is higher

28. You decide • If you were a wholesale person, would you rather try to sale a cheap product to a store or an expensive product. • Your salary is based on commission (the more you sell the more you make)

29. Pricing • Is the process whereby a business sets the price at which it will sell its products and services • Things to consider • Your price – what the materials cost you • Your Profit – how much do you want to make on your product • Market Demand – how much do people want your product • Strategy – changes in price to change demand

30. Employment Opportunities • Competition leads to producers looking for more and better workers • This can allow workers to demand more money • All employees are consumers • As consumer wages increase so does consumption

31. Thought Map • Create a graphic organizer on the back of your activity sheet that Illustrates what a producer considers when determining the value of a item and one for what a consumer considers when determining the value of a item. The Item Producer Consumer