7-3: Monopolistic Competition and Oligopolies Notes

Size: px
Start display at page:

Download "7-3: Monopolistic Competition and Oligopolies Notes"

Transcription

1 7-3: Monopolistic Competition and Oligopolies Notes

2 Learning Target 1. I will demonstrate my understanding of the characteristics of monopolistically competitive firms and oligopolies.

3 Monopolistic Competition Monopolistic competition: when many sellers offer similar, but not standardized products Example: Think of the market for t-shirts (they come in all styles and brands)

4 Characteristics of Monopolistic Competition 1. Many producers/sellers: meaningful competition exists Example: there are many restaurants where you can buy a hamburger (Chili s, McDonalds, Applebee's, TGI Friday's, Burger King, etc.)

5 Characteristics of Monopolistic Competition 2. Differentiated products: firms seek to distinguish their goods and services from those of other firms, even when the goods are close substitutes Example: Toothpaste that will leave your breath fresher

6 Characteristics of Monopolistic Competition 3. Few barriers to entry: start-up costs are relatively low and this allows many firms to enter the market Example: multiple t-shirt companies enter the market

7 Characteristics of Monopolistic Competition 4. Some control over prices: firms have to be careful not to raise prices too high otherwise consumers might substitute other goods Example: Coke raises its price and consumers start buying Pepsi

8 Characteristics of Monopolistic Competition Monopolistic competitive firms use nonprice competition to compete with rival firms Nonprice competition is using product differentiation and advertising to attract customers

9 Characteristics of Monopolistic Competition This can be done in several ways: A firm may seek to distinguish their particular brand based on unique characteristics (color, design, look, smell, touch) A producer might emphasize their service as a way of charging a higher price

10 Characteristics of Monopolistic Competition A firm might have a convenient location that is attractive to customers A firm might point to its image/status to attract customers Goods are all natural or item is more fashionable

11 Oligopolies Oligopoly: market structure in which only a few sellers offer a similar product Generally a result of economies of scale (costs decrease as more goods are produced) Competition does exist

12 Characteristics of Oligopolies 1. Few producers: a small number of firms control the market An industry is considered an oligopoly if the 4 top producers together supply more than 60% of total output

13 Characteristics of Oligopolies 2. Similar products: goods are generally the same, with minor variations Examples: cereal, light bulbs, kitchen appliances, and soft drinks May also sell standardized products (such as steel)

14 Characteristics of Oligopolies 3. High barriers to entry: it is difficult for firms to break in the market and compete Existing companies may take advantage of economies of scale and it would be expensive for a microchip company to compete with a large firm

15 Oligopolies Acting As Monopolies In some cases, oligopolies actual behave like monopolies Firms might try to control prices and other, smaller firms, may follow suit Firms might try to control the market through collusion, or making pricing agreements This is illegal

16 Oligopolies Acting As Monopolies A cartel is an organization of producers established to set production and price levels for a product OPEC is a well-known cartel that consists of 12 countries that agree to set quotas on oil production and exports This is an example of the potentially harmful effects of an oligopoly

17 7-4: Regulation and Deregulation Today NOTES

18 Promoting Competition Regulation: set of rules or laws designed to control business behavior to promote competition and protect consumers

19 Antitrust Legislation Antitrust legislation: laws that define monopolies and give government the power to control them and break them up

20 Trust Trust: when a group of firms are combined to reduce competition in an industry Example: Standard Oil Company (controlled 90% of the market)

21 Merger Merger: when 2 firms join together to become 1 If a merger will eliminate competition it will be denied by the government

22 Enforcing Antitrust Legislation The FTC and the Department of Justice are responsible for enforcing antitrust laws Mergers that allow companies to dominate a particular industry are not permitted The goal is not to allow companies to reduce competition What would happen if the two largest cell phone companies tried to merge?

23 Unfair Business Practices Price fixing: when businesses work together to set prices of competing products Market allocation: when competing businesses negotiate to divide up a market (could be by region) Predatory pricing: setting low prices to drive small producers of the same good out of business

24 Deregulation Deregulation: reducing or removing government control of a business Results in lower prices for consumers and more competition Example: airline industry was deregulated in 1978

Chapter 7. Section 3: Monopolist Competition & Oligopoly

Chapter 7. Section 3: Monopolist Competition & Oligopoly Chapter 7 Section 3: Monopolist Competition & Oligopoly Monopolist Competition Many companies compete in an open market to sell products that are similar but not identical Each firms hold a monopoly over

More information

Objective: What conditions must exist for perfect competition? What are barriers to entry and how do they affect the marketplace?

Objective: What conditions must exist for perfect competition? What are barriers to entry and how do they affect the marketplace? Perfect Competition Objective: What conditions must exist for perfect competition? What are barriers to entry and how do they affect the marketplace? *Be sure to leave a couple blank lines under each question

More information

MARKET STRUCTURES. Economics Marshall High School Mr. Cline Unit Two FC

MARKET STRUCTURES. Economics Marshall High School Mr. Cline Unit Two FC MARKET STRUCTURES Economics Marshall High School Mr. Cline Unit Two FC Price Discrimination Our previous example assumed that the monopolist must charge the same price to all consumers. But in some cases,

More information

Market Structures. Perfect competition Monopolistic Competition Oligopoly Monopoly

Market Structures. Perfect competition Monopolistic Competition Oligopoly Monopoly Market Structures The classification of market structures can be arranged along a continuum, ranging from perfect competition, the most competitive market, to monopoly, the lease competitive: Perfect competition

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. Review 10-14-15 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1. The four-firm concentration ratio equals the percentage of the value of accounted

More information

Market Power! Coca Cola 44%! Market power: The influence that any particular buyer or seller can exercise over the price of the product.! Nike "35%!

Market Power! Coca Cola 44%! Market power: The influence that any particular buyer or seller can exercise over the price of the product.! Nike 35%! Market Structures Market Power Market power: The influence that any particular buyer or seller can exercise over the price of the product. Ex. These dominate in their respective markets. Coca Cola 44%

More information

CHAPTER 8: SECTION 1 A Perfectly Competitive Market

CHAPTER 8: SECTION 1 A Perfectly Competitive Market CHAPTER 8: SECTION 1 A Perfectly Competitive Market Four Types of Markets A market structure is the setting in which a seller finds itself. Market structures are defined by their characteristics. Those

More information

1 of 23. Controlling Market Power: Antitrust and Regulation. Economics: Principles, Applications, and Tools O Sullivan, Sheffrin, Perez 6/e.

1 of 23. Controlling Market Power: Antitrust and Regulation. Economics: Principles, Applications, and Tools O Sullivan, Sheffrin, Perez 6/e. 1 of 23 2 of 23 In 1997, a U.S. court blocked the proposed merger of Staples and Office Depot, the nation s two largest office- supply retailers. P R E P A R E D B Y FERNANDO QUIJANO, YVONN QUIJANO, AND

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. Micro - HW 4 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In central Florida during the spring, strawberry growers are price takers. The reason

More information

Syllabus item: 57 Weight: 3

Syllabus item: 57 Weight: 3 1.5 Theory of the firm and its market structures - Monopoly Syllabus item: 57 Weight: 3 Main idea 1 Monopoly: - Only one firm producing the product (Firm = industry) - Barriers to entry or exit exists,

More information

Chapter 15 Oligopoly

Chapter 15 Oligopoly Goldwasser AP Microeconomics Chapter 15 Oligopoly BEFORE YOU READ THE CHAPTER Summary This chapter explores oligopoly, a market structure characterized by a few firms producing a product that mayor may

More information

Section 1 Perfect Competition

Section 1 Perfect Competition Market Structures Section 1 Perfect Competition Perfect Competition - a market structure in which a large number of firms all produce the same product. Four Conditions for Perfect Competition 1. Many Buyers

More information

Chapter 3 Where Prices Come From: The Interaction of Demand and Supply

Chapter 3 Where Prices Come From: The Interaction of Demand and Supply Economics 6 th edition 1 Chapter 3 Where Prices Come From: The Interaction of Demand and Supply Modified by Yulin Hou For Principles of Microeconomics Florida International University Fall 2017 What determines

More information

Edexcel (A) Economics A-level

Edexcel (A) Economics A-level Edexcel (A) Economics A-level Theme 3: Business Behaviour & the Labour Market 3.4 Market Structures 3.4.4 Oligopoly Notes Characteristics of an oligopoly: High barriers to entry and exit There are high

More information

QOD #: 29: Graphing Practice w/ Mr. Clifford

QOD #: 29: Graphing Practice w/ Mr. Clifford LO1 10-1 AGENDA Thurs 10/29 Regulated Monopoly (FRQ 2011 & 2012) QOD #: 29: Graphing Practice w/ Mr. Clifford Price Discriminating Monopoly Monopolistic Competition & Oligopoly CH 8/9 Results/TC & Retakes

More information

Special Pricing Practices. Managerial Economics: Economic Tools for Today s Decision Makers, 4/e

Special Pricing Practices. Managerial Economics: Economic Tools for Today s Decision Makers, 4/e Special Pricing Practices Chapter 11 Managerial Economics: Economic Tools for Today s Decision Makers, 4/e By Paul Keat and Philip Young Special Pricing Policies Introduction Cartel Arrangements Revenue

More information

Economics Chapter 8 Competition and Markets

Economics Chapter 8 Competition and Markets Economics Chapter 8 Competition and Markets CHAPTER 8: SECTION 1 - A Perfectly Competitive Market Four Types of Markets o A is the setting in which a seller finds itself. Market structures are defined

More information

Unit 4: Imperfect Competition

Unit 4: Imperfect Competition Unit 4: Imperfect Competition 1 Monopoly 2 Characteristics of Monopolies 3 5 Characteristics of a Monopoly 1. Single Seller One Firm controls the vast majority of a market The Firm IS the Industry 2. Unique

More information

Monopolistic. Monopolistic Competition. Competition. Unit 4: Imperfect Competition 4-3. Monopolistic Competition

Monopolistic. Monopolistic Competition. Competition. Unit 4: Imperfect Competition 4-3. Monopolistic Competition 7 February 2012 A Microeconomics 1 erfect Monopolistic Oligopoly ure Monopoly Monopolistic 1 Characteristics of Monopolistic : Relatively Large Number of Sellers ifferentiated roducts Some control over

More information

Chapter 7 Market Structures

Chapter 7 Market Structures Chapter 7 Market Structures Section 1 Competition 2 Perfect Competition Perfect competition is when a large number of buyers and sellers exchange identical products under five conditions. There should

More information

Edexcel Economics A-level

Edexcel Economics A-level Edexcel Economics A-level Unit 3: Business Behaviour Topic 3: Market Structures and Contestability 3.3 Oligopoly Notes Characteristics of an oligopoly: High barriers to entry and exit There are high barriers

More information

Use the following to answer question 4:

Use the following to answer question 4: Homework Chapter 11: Name: Due Date: Wednesday, December 4 at the beginning of class. Please mark your answers on a Scantron. It is late if your Scantron is not complete when I ask for it at 9:35. Get

More information

AQA Economics A-level

AQA Economics A-level AQA Economics A-level Microeconomics Topic 5: Perfect Competition, Imperfectly Competitive Markets and Monopoly 5.5 Oligopoly Notes Characteristics of an oligopoly: High barriers to entry and exit There

More information

Eco201 Review questions for chapters Prof. Bill Even ====QUESTIONS FOR CHAPTER 13=============================

Eco201 Review questions for chapters Prof. Bill Even ====QUESTIONS FOR CHAPTER 13============================= Eco201 Review questions for chapters 13-15 Prof. Bill Even ====QUESTIONS FOR CHAPTER 13============================= 1) A monopoly has two key features, which are. A) barriers to entry and close substitutes

More information

ECONOMICS. Paper 3 : Fundamentals of Microeconomic Theory Module 28 : Non collusive and Collusive model

ECONOMICS. Paper 3 : Fundamentals of Microeconomic Theory Module 28 : Non collusive and Collusive model Subject Paper No and Title Module No and Title Module Tag 3 : Fundamentals of Microeconomic Theory 28 : Non collusive and Collusive model ECO_P3_M28 TABLE OF CONTENTS 1. Learning Outcomes 2. Introduction

More information

Oligopoly. Quantity Price(per year) 0 $120 2,000 $100 4,000 $80 6,000 $60 8,000 $40 10,000 $20 12,000 $0

Oligopoly. Quantity Price(per year) 0 $120 2,000 $100 4,000 $80 6,000 $60 8,000 $40 10,000 $20 12,000 $0 Oligopoly 1. Markets with only a few sellers, each offering a product similar or identical to the others, are typically referred to as a. monopoly markets. b. perfectly competitive markets. c. monopolistically

More information

13 C H A P T E R O U T L I N E

13 C H A P T E R O U T L I N E PEARSON PRINCIPLES OF MICROECONOMICS E L E V E N T H E D I T I O N CASE FAIR OSTER Prepared by: Fernando Quijano w/shelly Tefft 2of 37 PART III MARKET IMPERFECTIONS AND THE ROLE OF GOVERNMENT Monopoly

More information

Unit 4: Imperfect Competition

Unit 4: Imperfect Competition Unit 4: Imperfect Competition 1 Monopoly 2 Characteristics of Monopolies 3 5 Characteristics of a Monopoly 1. Single Seller One Firm controls the vast majority of a market The Firm IS the Industry 2. Unique

More information

Monopolistic Competition Oligopoly Duopoly Monopoly. The further right on the scale, the greater the degree of monopoly power exercised by the firm.

Monopolistic Competition Oligopoly Duopoly Monopoly. The further right on the scale, the greater the degree of monopoly power exercised by the firm. Oligopoly Monopolistic Competition Oligopoly Duopoly Monopoly The further right on the scale, the greater the degree of monopoly power exercised by the firm. Imperfect competition refers to those market

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 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following statements is correct? A) Consumers have the ability to buy everything

More information

Carlton & Perloff Chapter 12 Vertical Integration and Vertical Restrictions. I. VERTICAL INTEGRATION AND VERTICAL RESTRICTIONS A. Vertical Integration

Carlton & Perloff Chapter 12 Vertical Integration and Vertical Restrictions. I. VERTICAL INTEGRATION AND VERTICAL RESTRICTIONS A. Vertical Integration I. VERTICAL INTEGRATION AND VERTICAL RESTRICTIONS A. Vertical Integration Carlton & Perloff II. 1. Operating at successive stages of production a. downstream: towards final consumers b. upstream: towards

More information

Name & Block: Word Definition Provide an Example (Must be a sentence) Demand (79)

Name & Block: Word Definition Provide an Example (Must be a sentence) Demand (79) Name & Block: Economics: Unit Two Study Guide Standards: SSEMI2 Explain how the law of demand, the law of supply, and prices work to determine production and distribution in a market economy. a. Define

More information

Market Structure & Imperfect Competition

Market Structure & Imperfect Competition In the Name of God Sharif University of Technology Graduate School of Management and Economics Microeconomics (for MBA students) 44111 (1393-94 1 st term) - Group 2 Dr. S. Farshad Fatemi Market Structure

More information

CHAPTER 6: Monopoly and Imperfect Competition

CHAPTER 6: Monopoly and Imperfect Competition CHAPTER 6: Monopoly and Imperfect Competition 1a. Column 1 (price): -, 2, 2, 2, 2; Column 2 (quantity): 0, 1000, 2000, 3000, 4000; Column 3 (total revenue): 0, 2000, 4000, 6000, 8000; Column 4 (marginal

More information

The Analysis of Competitive Markets

The Analysis of Competitive Markets C H A P T E R 12 The Analysis of Competitive Markets Prepared by: Fernando & Yvonn Quijano CHAPTER 12 OUTLINE 12.1 Monopolistic Competition 12.2 Oligopoly 12.3 Price Competition 12.4 Competition versus

More information

Oligopolies Part III

Oligopolies Part III Oligopolies Part III 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 The Prisoner s Dilemma Consider

More information

Section I (20 questions; 1 mark each)

Section I (20 questions; 1 mark each) Foundation Course in Managerial Economics- Solution Set- 1 Final Examination Marks- 100 Section I (20 questions; 1 mark each) 1. Which of the following statements is not true? a. Societies face an important

More information

Market Structure. Oligopoly

Market Structure. Oligopoly Market Structure Oligopoly Characteristics of Oligopoly The government does not intervene into the operations of the oligopolistically competitive firm in the market unless the oligopolist violates the

More information

Unit 7: Market Structures and Market Failures

Unit 7: Market Structures and Market Failures 1. Introduction Unit 7: Market Structures and Market Failures If you have a cell phone, at some point in the past you may have thought about changing your service provider. Perhaps you wanted to get a

More information

7.1 Perfect Competition and Monopoly Objectives

7.1 Perfect Competition and Monopoly Objectives 7.1 Perfect Competition and Monopoly Objectives Distinguish the features of perfect competition. Describe the barriers to entry that can create a monopoly. Compare the market structures of monopoly and

More information

Introduction. Learning Objectives. Learning Objectives. Economics Today Twelfth Edition. Chapter 24 Monopoly

Introduction. Learning Objectives. Learning Objectives. Economics Today Twelfth Edition. Chapter 24 Monopoly Roger LeRoy Miller Economics Today Twelfth Edition Chapter 24 Monopoly Introduction The cement market in Mexico is dominated by a single company that accounts for more than 70 percent of all sales. Why

More information

ECON December 4, 2008 Exam 3

ECON December 4, 2008 Exam 3 Name Portion of ID# Multiple Choice: Identify the letter of the choice that best completes the statement or answers the question. 1. A fundamental source of monopoly market power arises from a. perfectly

More information

1. THE STUDENTS WILL BE ABLE TO DEFINE AND EXPLAIN WHAT PERFECT COMPETITION IS

1. THE STUDENTS WILL BE ABLE TO DEFINE AND EXPLAIN WHAT PERFECT COMPETITION IS LIGHTHOUSE CPA SOCIAL SCIENCES DEPARTMENT ECONOMICS STUDY GUIDE # 8 - MARKET STRUCTURES CHAPTER LEARNING OBJECTIVES THE STUDENTS WILL BE ABLE TO DEFINE AND EXPLAIN WHAT PERFECT COMPETITION IS THE STUDENTS

More information

17 REGULATION AND ANTITRUST LAW. Chapter. Key Concepts

17 REGULATION AND ANTITRUST LAW. Chapter. Key Concepts Chapter 17 REGULATION AND ANTITRUST LAW Key Concepts Market Intervention Regulation consists of rules administered by a government agency to that determine prices, product standards and types, and conditions

More information

Pure Monopoly. McGraw-Hill/Irwin. Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Pure Monopoly. McGraw-Hill/Irwin. Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved. 10 Pure Monopoly McGraw-Hill/Irwin Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Four Market Models Characteristics of the Four Basic Market Models Characteristic Number of firms

More information

Microeconomics (Oligopoly & Game, Ch 12)

Microeconomics (Oligopoly & Game, Ch 12) Microeconomics (Oligopoly & Game, Ch 12) Lecture 17-18, (Minor 2 coverage until Lecture 18) Mar 16 & 20, 2017 CHAPTER 12 OUTLINE 12.1 Monopolistic Competition 12.2 Oligopoly 12.3 Price Competition 12.4

More information

INTERMEDIATE MICROECONOMICS LECTURE 13 - MONOPOLISTIC COMPETITION AND OLIGOPOLY. Monopolistic Competition

INTERMEDIATE MICROECONOMICS LECTURE 13 - MONOPOLISTIC COMPETITION AND OLIGOPOLY. Monopolistic Competition 13-1 INTERMEDIATE MICROECONOMICS LECTURE 13 - MONOPOLISTIC COMPETITION AND OLIGOPOLY Monopolistic Competition Pure monopoly and perfect competition are rare in the real world. Most real-world industries

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. Def: Market is a group of buyers and sellers of a particular good or service. P. 66. b. Def: A competitive

More information

CHAPTER 13 Oligopoly and Monopolistic Competition

CHAPTER 13 Oligopoly and Monopolistic Competition CHPTER 13 Oligopoly and Monopolistic Competition CHPTER OUTLINE 13.1 Market Structures 13.2 Game Theory Single-Period, Two-Firm, Quantity-Setting Game Why Firms Do Not Cooperate in a Single-Period Game

More information

AS/A Level Economics 9708 Unit 7: The Price System and Theory of the Firm

AS/A Level Economics 9708 Unit 7: The Price System and Theory of the Firm AS/A Level Economics 9708 Unit 7: The Price System and Theory of the Firm Recommended Prior Knowledge Unit 2 builds on the material covered on the Price System in the Core curriculum. Parts of sections

More information

Chapter 7: Market Structures Section 2

Chapter 7: Market Structures Section 2 Chapter 7: Market Structures Section 2 Objectives 1. Describe characteristics and give examples of a monopoly. 2. Describe how monopolies, including government monopolies, are formed. 3. Explain how a

More information

Gross Domestic Product

Gross Domestic Product Question 1: What is GDP? Answer 1: From a macroperspective, the broadest measure of economic activity is gross domestic product (GDP). GDP represents all the goods and services that are produced within

More information

Principles of Microeconomics Assignment 8 (Chapter 10) Answer Sheet. Class Day/Time

Principles of Microeconomics Assignment 8 (Chapter 10) Answer Sheet. Class Day/Time 1 Principles of Microeconomics Assignment 8 (Chapter 10) Answer Sheet Name Class Day/Time Questions of this homework are in the next few pages. Please find the answer of the questions and fill in the blanks

More information

COST OF PRODUCTION & THEORY OF THE FIRM

COST OF PRODUCTION & THEORY OF THE FIRM MICROECONOMICS: UNIT III COST OF PRODUCTION & THEORY OF THE FIRM One of the concepts mentioned in both Units I and II was and its components, total cost and total revenue. In this unit, costs and revenue

More information

Introduction. Learning Objectives. Learning Objectives. Chapter 28. Regulation and Antitrust Policy in a Globalized Economy

Introduction. Learning Objectives. Learning Objectives. Chapter 28. Regulation and Antitrust Policy in a Globalized Economy Chapter 28 Regulation and in a Globalized Economy Introduction Price fixing can occur in any industry when it is possible for firms to collude. Fashion-modeling agencies have become the subject of an antitrust

More information

Monopoly. While a competitive firm is a price taker, a monopoly firm is a price maker.

Monopoly. While a competitive firm is a price taker, a monopoly firm is a price maker. Monopoly Monopoly While a competitive firm is a price taker, a monopoly firm is a price maker. Monopoly A firm is considered a monopoly if... it is the sole seller of its product. its product does not

More information

ECO201: PRINCIPLES OF MICROECONOMICS FIRST MIDTERM EXAMINATION

ECO201: PRINCIPLES OF MICROECONOMICS FIRST MIDTERM EXAMINATION YOUR NAME Row Number ECO201: PRINCIPLES OF MICROECONOMICS FIRST MIDTERM EXAMINATION Prof. Bill Even Novermber 12, 2015 FORM 1 Directions 1. Fill in your scantron with your unique-id and the form number

More information

Monopoly. Chapter 15

Monopoly. Chapter 15 Monopoly Chapter 15 Monopoly While a competitive firm is a price taker, a monopoly firm is a price maker. Monopoly u A firm is considered a monopoly if... it is the sole seller of its product. its product

More information

2. Facebook is a US American company. Why does the Bundeskartellamt have competence to investigate in this case?

2. Facebook is a US American company. Why does the Bundeskartellamt have competence to investigate in this case? 19 December 2017 Background information on the Facebook proceeding 1. What is an abuse of dominance proceeding? Antitrust enforcement is largely based on three tools. One is the prosecution of cartel agreements

More information

Edexcel (A) Economics A-level

Edexcel (A) Economics A-level Edexcel (A) Economics A-level Theme 3: Business Behaviour & the Labour Market 3.4 Market Structures 3.4.5 Monopoly Notes Characteristics of monopoly: Monopolies can be characterised by: o Profit maximisation.

More information

INTERPRETATION. SOURCES OF MONOPOLY (Related to P-R pp )

INTERPRETATION. SOURCES OF MONOPOLY (Related to P-R pp ) ECO 300 Fall 2005 November 10 MONOPOLY PART 1 INTERPRETATION Literally, just one firm in an industry But interpretation depends on how you define industry General idea a group of commodities that are close

More information

AGENDA Mon 10/12. Economics in Action Review QOD #21: Competitive Farming HW Review Pure Competition MR = MC HW: Read pp Q #7

AGENDA Mon 10/12. Economics in Action Review QOD #21: Competitive Farming HW Review Pure Competition MR = MC HW: Read pp Q #7 AGENDA Mon 10/12 Economics in Action Review QOD #21: Competitive Farming HW Review Pure Competition MR = MC HW: Read pp 173-176 Q #7 QOD #21: Competitive Farming A purely competitive wheat farmer can sell

More information

AQA Economics A-level

AQA Economics A-level AQA Economics A-level Microeconomics Topic 5: Perfect Competition, Imperfectly Competitive Markets and Monopoly 5.6 Monopoly and monopoly power Notes Characteristics of monopoly: Monopolies can be characterised

More information

Agenda. Profit Maximization by a Monopolist. 1. Profit Maximization by a Monopolist. 2. Marginal Revenue. 3. Profit Maximization Exercise

Agenda. Profit Maximization by a Monopolist. 1. Profit Maximization by a Monopolist. 2. Marginal Revenue. 3. Profit Maximization Exercise Agenda 1. Profit Maximization by a Monopolist 2. Marginal Revenue 3. Profit Maximization Exercise 4. Effect of Elasticities on Monopoly Price 5. Comparative Statics of Monopoly 6. Monopolist with Multiple

More information

Monopoly. PowerPoint Slides prepared by: Andreea CHIRITESCU Eastern Illinois University

Monopoly. PowerPoint Slides prepared by: Andreea CHIRITESCU Eastern Illinois University 15 Monopoly PowerPoint Slides prepared by: Andreea CHIRITESCU Eastern Illinois University 1 Market power Why Monopolies Arise Alters the relationship between a firm s costs and the selling price Monopoly

More information

GLOBAL. Microeconomics ELEVENTH EDITION. Michael Parkin EDITION

GLOBAL. Microeconomics ELEVENTH EDITION. Michael Parkin EDITION GLOBAL EDITION Microeconomics ELEVENTH EDITION Michael Parkin Microeconomics, Global Edition - PDF - PDF - PDF Table of Contents Cover Microeconomics About the Author Brief Contents Alternative Pathways

More information

LESSON FIVE MAINTAINING COMPETITION

LESSON FIVE MAINTAINING COMPETITION LESSON FIVE MAINTAINING COMPETITION LESSON DESCRIPTION This lesson introduces the rationale for maintaining and strengthening competition, and illustrates the U.S. experience with antitrust laws and other

More information

Who can we trust? Cooperative Strategy. Cooperative Strategy. Strategic Alliance. Chapter 9. Cooperative strategy is a strategy in which firms

Who can we trust? Cooperative Strategy. Cooperative Strategy. Strategic Alliance. Chapter 9. Cooperative strategy is a strategy in which firms Chapter 9 Cooperative Strategy Who can we trust? 1 Cooperative Strategy Cooperative strategy is a strategy in which firms work together to achieve a shared objective Cooperating with other firms is a strategy

More information

Production in Perfectly Competitive Markets. How prices act as signals for production decisions in markets with many suppliers

Production in Perfectly Competitive Markets. How prices act as signals for production decisions in markets with many suppliers Production in Perfectly Competitive Markets How prices act as signals for production decisions in markets with many suppliers Demand and Supply Analysis Assumed that there were many buyers and sellers

More information

Micro Lecture 16: Measuring Monopoly s Effect and Multi-plant Monopoly

Micro Lecture 16: Measuring Monopoly s Effect and Multi-plant Monopoly Micro Lecture 16: Measuring Monopoly s Effect and Multi-plant Monopoly Review: Perfect Competition, Monopoly, and Efficiency Perfect Competition, Monopoly, and Profit Maximization Perfect Competition Monopoly

More information

7-1: PERFECT COMPETITION NOTES

7-1: PERFECT COMPETITION NOTES 7-1: PERFECT COMPETITION NOTES LEARNING TARGETS 1. I WILL DEMONSTRATE MY UNDERSTANDING OF THE CHARACTERISTICS OF PERFECT COMPETITION AND MONOPOLIES. MARKET STRUCTURES MARKET STRUCTURE: AN ECONOMIC MODEL

More information

Department of Economics, University of Oslo. ECON4820 Spring Last modified:

Department of Economics, University of Oslo. ECON4820 Spring Last modified: Department of Economics, University of Oslo ECON4820 Spring 2010 Last modified: 2010.04.27 Producers s Outline Products are sold through s. How does this affect market performance? Situation: Monopolist

More information

MICROECONOMICS SECTION I. Time - 70 minutes 60 Questions

MICROECONOMICS SECTION I. Time - 70 minutes 60 Questions MICROECONOMICS SECTION I Time - 70 minutes 60 Questions Directions: Each of the questions or incomplete statements below is followed by five suggested answers or completions. Select the one that is best

More information

Lecture 19: Imperfect Competition and Monopoly

Lecture 19: Imperfect Competition and Monopoly Lecture 19: Imperfect Competition and Monopoly No Lectures Next Week (No Lecture Tuesday, Nov 21) No discussion sections next week! Rent-Seeking p 1 A royalty charge for fish p 2 Perfect and Imperfect

More information

Introduction. Learning Objectives. Learning Objectives. Economics Today Twelfth Edition. Chapter 25 Monopolistic Competition

Introduction. Learning Objectives. Learning Objectives. Economics Today Twelfth Edition. Chapter 25 Monopolistic Competition Roger LeRoy Miller Economics Today Twelfth Edition Chapter 25 Copyright 2004 Pearson Addison Wesley. All rights reserved. Introduction Thomas Jefferson extolled the virtues of allowing individuals to pursue

More information

Slides and Images, Worth Publishers Inc. 8-1

Slides and Images, Worth Publishers Inc. 8-1 Perfect Competition Michael J. Murray Slides and Images, Worth Publishers Inc. 8-1 Market Structure Analysis By observing a few industry characteristics, we can predict pricing and output behavior of the

More information

iv. The monopolist will receive economic profits as long as price is greater than the average total cost

iv. The monopolist will receive economic profits as long as price is greater than the average total cost Chapter 15: Monopoly (Lecture Outline) -------------------------------------------------------------------------------------------------------------------------- Monopolies have no close competitors and,

More information

Agreements that substantially lessen competition

Agreements that substantially lessen competition Agreements that substantially lessen competition This fact sheet explains how and when an agreement may be illegal under section 27 of the Commerce Act. It is designed to give businesses an understanding

More information

1. Market Definition, Measurement And Concentration

1. Market Definition, Measurement And Concentration 1. Market Definition, Measurement And Concentration 1.0 Overview A merger is unlikely to create or enhance market power or to facilitate its exercise unless it significantly increases concentration and

More information

Student Activities. Lesson Four. Shopping Wisely 04/09

Student Activities. Lesson Four. Shopping Wisely 04/09 Student Activities $ Lesson Four Shopping Wisely 04/09 comparing choices Compare your choices for buying soft drinks and clothing items using the charts below. Soft Drink One Can vending machine brand

More information

Monopoly. Cost. Average total cost. Quantity of Output

Monopoly. Cost. Average total cost. Quantity of Output While a competitive firm is a price taker, a monopoly firm is a price maker. A firm is considered a monopoly if... it is the sole seller of its product. its product does not have close substitutes. The

More information

Microeconomics. More Tutorial at

Microeconomics.  More Tutorial at Microeconomics 1. Suppose a firm in a perfectly competitive market produces and sells 8 units of output and has a marginal revenue of $8.00. What would be the firm s total revenue if it instead produced

More information

Short run and long run price and output decisions of a monopoly firm,

Short run and long run price and output decisions of a monopoly firm, 1 Chapter 1-Theory of Monopoly Syllabus-Concept of imperfect competition, Short run and long run price and output decisions of a monopoly firm, Concept of a supply curve under monopoly, comparison of perfect

More information

Chapter 13. Oligopoly and Monopolistic Competition

Chapter 13. Oligopoly and Monopolistic Competition Chapter 13 Oligopoly and Monopolistic Competition Chapter Outline Some Specific Oligopoly Models : Cournot, Bertrand and Stackelberg Competition When There are Increasing Returns to Scale Monopolistic

More information

SAMPLE MULTIPLE CHOICE FINAL EXAM CHAPTER 6 THE ANALYSIS OF COSTS

SAMPLE MULTIPLE CHOICE FINAL EXAM CHAPTER 6 THE ANALYSIS OF COSTS 1. SAMPLE MULTIPLE CHOICE FINAL EXAM CHAPTER 6 THE ANALYSIS OF COSTS Long-run average cost equals long-run marginal cost whenever a) the production function exhibits constant returns to scale. b) fixed

More information

Monopolistic Competition

Monopolistic Competition CHAPTER 16 Monopolistic Competition Goals in this chapter you will Examine market structures that lie between monopoly and competition Analyze competition among firms that sell differentiated products

More information

A monopoly market structure is one characterized by a single seller of a unique product with no close substitutes.

A monopoly market structure is one characterized by a single seller of a unique product with no close substitutes. These notes provided by Laura Lamb are intended to complement class lectures. The notes are based on chapter 12 of Microeconomics and Behaviour 2 nd Canadian Edition by Frank and Parker (2004). Chapter

More information

AQA Economics AS-level

AQA Economics AS-level AQA Economics AS-level Microeconomics Topic 4: Competitive and Concentrated Markets 4.4 Monopoly and monopoly power Notes A pure monopoly is the sole seller in a market. In the UK, when one firm dominates

More information

Introduction to the Antimonopoly Law

Introduction to the Antimonopoly Law Introduction to the Antimonopoly Law Prof. Fumio Sensui Graduate School of Law, Kobe University E-mail: sensui@kobe-u.ac.jp What Practices are Subject to Control by the Antimonopoly Act? Cartels Monopolization

More information

Chapter 2 The Marketing Environment

Chapter 2 The Marketing Environment Chapter 2 The Marketing Environment 1 Learning outcomes Describe the role that the marketing landscape plays and the influence that it exerts on the organisation Explain the interfaces between marketing

More information

S11Microeconomics, Exam 3 Answer Key. Instruction:

S11Microeconomics, Exam 3 Answer Key. Instruction: S11Microeconomics, Exam 3 Answer Key Instruction: Exam 3 Student Name: Microeconomics, several versions Early May, 2011 Instructions: I) On your Scantron card you must print three things: 1) Full name

More information

Monopoly CHAPTER. Goals. Outcomes

Monopoly CHAPTER. Goals. Outcomes CHAPTER 15 Monopoly Goals in this chapter you will Learn why some markets have only one seller Analyze how a monopoly determines the quantity to produce and the price to charge See how the monopoly s decisions

More information

2. What is the Law of Supply? 3. What is a Complementary Good? 4. What is a Substitute Good?

2. What is the Law of Supply? 3. What is a Complementary Good? 4. What is a Substitute Good? 1. What is the Law of Demand? 2. What is the Law of Supply? 3. What is a Complementary Good? 4. What is a Substitute Good? 5. List the Demand Shifters: (have these memorized for the test!) T R I B E 6.

More information

ECON 102 Kagundu Final Exam (New Material) Practice Exam Solutions

ECON 102 Kagundu Final Exam (New Material) Practice Exam Solutions www.liontutors.com ECON 102 Kagundu Final Exam (New Material) Practice Exam Solutions 1. A A large number of firms will be able to operate in the industry because you only need to produce a small amount

More information

AP Microeconomics Review Session #3 Key Terms & Concepts

AP Microeconomics Review Session #3 Key Terms & Concepts The Firm, Profit, and the Costs of Production 1. Explicit vs. implicit costs 2. Short-run vs. long-run decisions 3. Fixed inputs vs. variable inputs 4. Short-run production measures: be able to calculate/graph

More information

Economics 110 Final exam Practice Multiple Choice Qs Fall 2013

Economics 110 Final exam Practice Multiple Choice Qs Fall 2013 Final Exam Practice Multiple Choice Questions - ANSWER KEY Which of the following statements is not correct? a. Monopolistic competition is similar to monopoly because in each market structure the firm

More information

Other examples of monopoly include Australia Post.

Other examples of monopoly include Australia Post. In this session we will look at monopolies, where there is only one firm in the market with no close substitutes. For example, Microsoft first designed the operating system Windows. As a result of this

More information

If you would like to provide us with your thoughts on what ACM should focus on, please get in touch by sending an to

If you would like to provide us with your thoughts on what ACM should focus on, please get in touch by sending an  to 1/5 June 2016 Introduction The Netherlands Authority for Consumers and Markets (ACM) creates opportunities and options for businesses and consumers. By fighting against unfair competition and making it

More information