Textbook Chapter 3-3
Types Of Economic Competition
Pages 72-78
LESSON SUMMARY
The text discusses various market structures in economics, focusing on pure competition, monopoly, oligopoly, and monopolistic competition. Pure competition is characterized by numerous competitors offering similar products, such as paper clips, where marketing is minimal since prices are dictated by competition. On the other hand, a monopoly exists when a single company dominates an industry, allowing it to set prices without competition. The text uses the car industry as a hypothetical example where one company could control the market, leading to higher prices due to lack of alternatives. The government enforces antitrust laws to maintain competition and protect consumers.
The text also introduces oligopoly, a market structure where a few companies offer similar products or services, like airlines, leading to limited price variation. Monopolistic competition is highlighted as the most common market structure, where many firms offer differentiated products and compete on various factors, including price and unique features. The overall market dynamics are influenced by consumer demand and producer supply, which together shape the economy.
Additionally, the content emphasizes the importance of understanding microeconomics for marketers, as it helps them analyze consumer behavior and pricing strategies. Factors affecting demand, such as consumer preferences, available supply, and alternatives, play a critical role in purchasing decisions. The relationship between supply and demand is illustrated through demand and supply curves, highlighting how they intersect to determine market prices and quantities of goods produced, thereby affecting overall economic balance.
The text discusses various market structures in economics, focusing on pure competition, monopoly, oligopoly, and monopolistic competition. Pure competition is characterized by numerous competitors offering similar products, such as paper clips, where marketing is minimal since prices are dictated by competition. On the other hand, a monopoly exists when a single company dominates an industry, allowing it to set prices without competition. The text uses the car industry as a hypothetical example where one company could control the market, leading to higher prices due to lack of alternatives. The government enforces antitrust laws to maintain competition and protect consumers.
The text also introduces oligopoly, a market structure where a few companies offer similar products or services, like airlines, leading to limited price variation. Monopolistic competition is highlighted as the most common market structure, where many firms offer differentiated products and compete on various factors, including price and unique features. The overall market dynamics are influenced by consumer demand and producer supply, which together shape the economy.
Additionally, the content emphasizes the importance of understanding microeconomics for marketers, as it helps them analyze consumer behavior and pricing strategies. Factors affecting demand, such as consumer preferences, available supply, and alternatives, play a critical role in purchasing decisions. The relationship between supply and demand is illustrated through demand and supply curves, highlighting how they intersect to determine market prices and quantities of goods produced, thereby affecting overall economic balance.
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Is marketing REALLY necessary for salt or paper clips?
You know what salt does, you know what paper clips do....
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Worksheet Questions 1-8
Directions: The video directly below will help you answer questions 1-8 on the worksheet.
Questions Answered In Video 1 (And Article)
1.) What product example does Mr. Kazanjian highlight for pure competition? ________________
2.) Do products in pure competition markets need advertising? Yes/No
3.) What are consumers (customers) looking for in a pure competition market? Video 2:12
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4.) What is the opposite of pure competition? _______________________
5.) Does the United States government allow monopolies? Video 3:34 ________________
6.) What happens to the price of products in a monopoly? Video 3:59
______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________
7.) Look at the article referenced in the video (the link is under the video). Define what antitrust laws are.
______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________
8.) Use the definitions above, Video 1 and the text in chapter 3-3 to compare and contrast pure competition and monopoly. ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________
1.) What product example does Mr. Kazanjian highlight for pure competition? ________________
2.) Do products in pure competition markets need advertising? Yes/No
3.) What are consumers (customers) looking for in a pure competition market? Video 2:12
______________________________________________________________________________ ______________________________________________________________________________
4.) What is the opposite of pure competition? _______________________
5.) Does the United States government allow monopolies? Video 3:34 ________________
6.) What happens to the price of products in a monopoly? Video 3:59
______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________
7.) Look at the article referenced in the video (the link is under the video). Define what antitrust laws are.
______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________
8.) Use the definitions above, Video 1 and the text in chapter 3-3 to compare and contrast pure competition and monopoly. ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________
Worksheet Questions, 9, 10, 11
Directions: The video directly below will help you answer questions 9,10,11.
Questions Answered In Video 2
9.) Explain the characteristics of oligopolies and monopolistic competition.
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10.) What is the most common type of economic competition?
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11.) Explain the graphic from the video 1:30-2:45. Why are pure competition, monopolistic competition and pure monopoly labeled under imperfect competition? Hint: Look at the price graph for pure competition on page 73 of the textbook.
9.) Explain the characteristics of oligopolies and monopolistic competition.
______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________
10.) What is the most common type of economic competition?
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11.) Explain the graphic from the video 1:30-2:45. Why are pure competition, monopolistic competition and pure monopoly labeled under imperfect competition? Hint: Look at the price graph for pure competition on page 73 of the textbook.
Now It Is Time For You To Read The Textbook Chapter And Take The Quizzes From The Textbook.
Textbook Chapter 3-3
Types Of Economic Competition
Section 1: All-Out Competition Or No Competition At All
Pages 72-74
Directions: Your first quiz is on the first section of Chapter 3-3 titled All-Out Competition Or No Competition At All. This section goes from pages 72-74. Watch the video below, read the summary and take the quiz below.
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Summary of textbook section "All Out Competition Or No Competition At All"
The first section of textbook chapter 3-3 discusses the impact of competition on consumer and supplier decisions, focusing on the factors that influence pricing and market behavior. In highly competitive markets where many businesses offer similar products, both consumers and suppliers struggle to raise prices because there are so many options available. The two key factors that define economic competition are the number of firms in the market and the similarity between their products, which leads to the classification of four forms of competition: pure competition, monopoly, oligopoly, and monopolistic competition.
In a pure competition market, many suppliers offer nearly identical products, giving consumers significant control over pricing. Suppliers cannot increase prices because consumers can easily switch to another business offering the same product. Examples include agricultural products like corn and wheat, where every producer's offerings are almost identical. Consumers benefit from low prices, and businesses must accept the market price to remain competitive.
In contrast, a monopoly is the opposite of pure competition, where one supplier offers a unique product and has nearly total control over pricing. Consumers have little choice but to accept the prices set by the monopolist because no other companies offer the same product. Utility companies, such as those providing electricity or water, often operate as monopolies, and their prices are regulated by the government to prevent exploitation. In rare cases where a business dominates a specific geographic location, it can function similarly to a monopoly.
The text highlights how different market structures affect pricing power and consumer choice. In pure competition, prices remain low due to high competition, whereas monopolies can set prices without fear of competition, although government regulations often prevent abuse of this power.
The first section of textbook chapter 3-3 discusses the impact of competition on consumer and supplier decisions, focusing on the factors that influence pricing and market behavior. In highly competitive markets where many businesses offer similar products, both consumers and suppliers struggle to raise prices because there are so many options available. The two key factors that define economic competition are the number of firms in the market and the similarity between their products, which leads to the classification of four forms of competition: pure competition, monopoly, oligopoly, and monopolistic competition.
In a pure competition market, many suppliers offer nearly identical products, giving consumers significant control over pricing. Suppliers cannot increase prices because consumers can easily switch to another business offering the same product. Examples include agricultural products like corn and wheat, where every producer's offerings are almost identical. Consumers benefit from low prices, and businesses must accept the market price to remain competitive.
In contrast, a monopoly is the opposite of pure competition, where one supplier offers a unique product and has nearly total control over pricing. Consumers have little choice but to accept the prices set by the monopolist because no other companies offer the same product. Utility companies, such as those providing electricity or water, often operate as monopolies, and their prices are regulated by the government to prevent exploitation. In rare cases where a business dominates a specific geographic location, it can function similarly to a monopoly.
The text highlights how different market structures affect pricing power and consumer choice. In pure competition, prices remain low due to high competition, whereas monopolies can set prices without fear of competition, although government regulations often prevent abuse of this power.
Directions (Continued): After read the first section of Chapter 3-3, take the quiz on Schoology. You can preview the questions below.
Textbook Chapter 3-3
Types Of Economic Competition
Section 2: Between The Extremes
Pages 74-78
Directions: Your second quiz is on the second section of Chapter 3-3 titled Between The Extremes. This section goes from pages 74-78. Watch the video below, read the summary and take the quiz below.
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Summary of textbook section "Between The Extremes"
The text discusses the different types of economic competition that exist between the extremes of pure competition and monopoly, focusing on two main types: oligopoly and monopolistic competition. In an oligopoly, a few businesses offer very similar products or services, while in monopolistic competition, many businesses compete by offering somewhat differentiated products.
Oligopolies occur when a limited number of firms dominate a market with similar products, such as airlines or car manufacturers. In this scenario, businesses can sometimes behave like monopolies if they cooperate to set prices, but if they compete aggressively, prices are kept low, giving consumers more control. An individual company cannot significantly influence the overall price unless all competitors agree on changes. Industries such as movie theaters, banks, and computer manufacturers can also exhibit oligopolistic traits, where price changes by one business often lead to similar moves by competitors.
Monopolistic competition, which is more common, involves many businesses offering products that are slightly different from one another. The number of competitors and the extent of product differentiation determine how much control each firm has over pricing. The more unique a product or service is, the more control a business can exercise. However, if products are very similar, businesses have limited control over prices. Common examples include retail stores, restaurants, athletic shoes, and consumer electronics.
Understanding the type of competition a business faces is crucial for maximizing profits. In pure competition, businesses have little control over prices, whereas monopolies have near-total control. Oligopolistic firms must closely monitor competitors' actions, while firms in monopolistic competition should focus on differentiating their products to gain an edge in the market.
The text discusses the different types of economic competition that exist between the extremes of pure competition and monopoly, focusing on two main types: oligopoly and monopolistic competition. In an oligopoly, a few businesses offer very similar products or services, while in monopolistic competition, many businesses compete by offering somewhat differentiated products.
Oligopolies occur when a limited number of firms dominate a market with similar products, such as airlines or car manufacturers. In this scenario, businesses can sometimes behave like monopolies if they cooperate to set prices, but if they compete aggressively, prices are kept low, giving consumers more control. An individual company cannot significantly influence the overall price unless all competitors agree on changes. Industries such as movie theaters, banks, and computer manufacturers can also exhibit oligopolistic traits, where price changes by one business often lead to similar moves by competitors.
Monopolistic competition, which is more common, involves many businesses offering products that are slightly different from one another. The number of competitors and the extent of product differentiation determine how much control each firm has over pricing. The more unique a product or service is, the more control a business can exercise. However, if products are very similar, businesses have limited control over prices. Common examples include retail stores, restaurants, athletic shoes, and consumer electronics.
Understanding the type of competition a business faces is crucial for maximizing profits. In pure competition, businesses have little control over prices, whereas monopolies have near-total control. Oligopolistic firms must closely monitor competitors' actions, while firms in monopolistic competition should focus on differentiating their products to gain an edge in the market.
Directions (Continued): After read the second section of Chapter 3-3, take the quiz on Schoology. You can preview the questions below.
