Microeconomics Market Systems
Objectives -Compare and Contrast Perfectly Competitive and Monopolistic Markets -Examine the History of Monopolistic Markets
Vocab- Market Structure -Market Structures- the setting in which a market FINDS itself. -Defined by a number of characteristics -1. Number of SELLERS -2. The PRODUCT that sellers produce and sell -3. How easy (or difficult) it is to ENTER and LEAVE the market Ex. Bottled Water
Is it really worth it?
Want to outsmart the bottled water companies?
Perfectly Competitive Markets A. Perfectly Competitive Market- Market structure characterized by 4 traits -Many BUYERS and SELLERS -Firms sell IDENTICAL goods - All RELEVANT information is available to buyers and sellers - EASY entry and exit in and out of market
Price Takers -Price Takers- a seller that can sell all its output at the EQUILIBRIUM price but can sell none of its output at any other price Ex. FARMERS
Nike Fuelband https://www.youtube.com/watch?v=dg0vlfftzds
Monopolistic Markets Monopolistic Markets include the following: 1. Consists of ONE seller 2. Sells a product with NO close substitutes 3. BARRIERS TO ENTRY are extremely high Price Searcher- A seller that can sell output at VARIOUS prices Public Franchise- laws that allow MONOPOLIES Natural Monopoly- A firm with such a low ATC only it can SURVIVE in the market
Timeline of American monopolies - In your rows, group up and see if you can put them in order - We will meet back as a class and put them together on the timeline - We will also ask the question of if these firms are still monopolies
Timeline Order Postal Service- Started Ancient times, still a monopoly NCAA- Founded 1906- Now could be debated- Is the NAIA a reasonable competitor? NHS- Founded 1921- still considered a monopoly MPAA- Motion Picture Association of America founded 1960- Still a monopoly Microsoft- founded 1975- no longer a monopoly
Venn Diagram Draw a Venn Diagram on your packet labeled as the Venn Diagram page With your row partner find 3 differences between these two structures monopolistic and perfectly competitive, and 2 similarities When you are finished- complete your exit slip- use some of the blank space on the Venn Diagram Sheet to answer this. 1. What Characteristics are seen in monopolies 2. Do you believe Nike is a monopoly? What about in the fuelband business? 3. Which monopoly do you find most surprising? Why?
Writing Opener
Openers What is your favorite Cereal?
Objectives - Determine what an Oligopolistic Market looks like - Determine if you favor Robber Barons or Captains of Industry
Oligopolistic Markets A. OLIGOPOLISTIC Market Structure 1. It has FEW Sellers 2. Sell either IDENTICAL or SLIGHTLY different 3. Large BARRIERS TO ENTRY; less than monopolies B. CARTEL AGREEMENT- CEO s team up to TAKE OUT competition
Oligopolies in History 1. GROCERY STORES 2. Automobile Manufacturing (American- Made) 3. Cereal Producers 4. Laundry Soaps
Can you name them? Any guesses as to how much they are worth, combined?
What are they worth? 1.146 TRILLION DOLLARS! 1,146,000,000,000.00 -What could we buy with that?
Industrialists A. Carnegie- STEEL B. Rockefeller- OIL C. J.P. Morgan- FINANCE and industrial consolidation D. Vanderbilt- RAILROADS, water transport E. Mellon- FINANCE, oil F. Duke- TOBACCO G. Hinde- RAILROADS, water transport, SHIPPING, hotels
Captain of Industry or Robber Baron Captain of Industry -Most of these men put their funds to good use - They earned their wealth - Wealth can trickle down Robber Baron - Wealth is so unevenly distributed - There is not enough being done for the good of the poor -Barriers to Entry are too high.
Captains of Industry or Robber Barons Also known as INDUSTRIALISTS, captains of industry, or philanthropists -What do you think? Do you view these men as Industrialists or Robber Barons? What would you change about the structure behind this? Would you change anything?
Distribution of Wealth Video https://www.youtube.com/watch?v=jtj9acwkakm
Monopolistic Competitive
Objectives -Recognize the characteristics of competitive monopolies - Compare and contrast the different market structures
Monopolistic Competitive Monopolistic Competitive A. Market structure Characterized by 3 characteristics 1. MANY buyers and sellers 2. Production and sale of slightly DIFFERENTIATED products 3. Easy entry and EASY exit in and out of the market B. If you were in a Monopolistic Competitive market, would you prefer that or would you rather become a monopoly?
Vocab C. COMPETITION is fierce in this type of market D. See if you can name 3 examples of Monopolistic Competitive Markets 1. 2. 3.
Which costs the most?
Which costs the most?
Monopolistic Competitive video https://www.youtube.com/watch?v=t3f1vt3iync -3:13
Monopolistic Competitive?
Venn Diagram - Compare and Contrast Monopolistic and Monopolistic Competitive Markets - At least five differences and three similarities -Prepare to discuss
Exit slip -Fill it out just beneath the chart that you filled in. -1. What could be a benefit of having a competitive monopoly -2. Do you believe Apple is a monopoly or a monopolistic competitive? -3. Predicting: Tomorrow we are talking about price discrimination and anti-trust laws. What do you believe price discrimination is and what are anti-trust laws?
Price Discrimination/Anti-Trust Laws
Price Discrimination and Anti-Trust Laws Both of these have to deal with UNETHICAL business practices
Price Discrimination PRICE DISCRIMINATION- The act of changing or manipulating prices on the basis of who is buying 1. This is ILLEGAL (in some cases) 2. Still Practiced 3. Hard to REGULATE
Antitrust Laws Antitrust Laws- created to reduce the number of MONOPOLIES 1. Invalid if LAWS are made to protect certain MONOPOLIES 2. Inspired by the ROBBER BARONS 3. Seen as one of the first forms of GOVERNMENT intervention in regulation within the economy
Timeline Activity - Take out your thick packet - Turn to your second timeline - Break up into your rows to complete your portion of the timeline - These are your notes for Anti-Trust Acts - We will cover this as a class when you finish.
Price Discrimination Article - Read the Article -Answer questions about the article -We will discuss if we have time
Project Introduction
Basics - It will be a presentation- 4-5 minutes - You will be in groups of YOUR choice of up to 3 - I need half of the class to be in 2 s and the other half in 3 s- no more than 16 groups. - EVERYONE needs to talk - Topic Selection will be RANDOM - Pick your groups and then wait for Miss Dolge -If you select a topic that is one we have not covered yet, you will present Thursday; If you select a topic we have researched, you will present Wednesday.
The Competition - The class will vote on who gives the most effective presentation - Think about it like this: you own a business and you have a space for an expert on a specific micro concept- who would you hire? - Mr. Ackerman s vote counts for 3 student votes -Winners will receive a prize.
Picking topics Weds topics: - Perfectly competitive -Mono. Competitive -Anti-trust laws -Oligopolistic markets Thursday Topics -Cartels -What determines wages -Labor Unions - Gov t Regulations