Unit 2- Ch_ 7- 2 Imperfectly Competitive Markets

CP Economics (Chapter 7, #2) GPS SSEM14c
Name ______________________________
Date ___________________ Period______
Market Structures:
Imperfectly Competitive Markets
Warm Up #20
How much are you willing to
pay for the following items?
Why and how did you decide on
those prices?
A can of soda
Chrysler 300
One month DIRECTV
I. Imperfectly Competitive Markets
A. When a _________________________ has been dominated by just ________________ or _________ __________________.
B. These types of structures usually results in _______________________ ___________________________.
II. Characteristics of an Oligopoly
1. Oligopoly- market structure with only a ______________ __________________ offering _________________ ____________________
B. Less competitive than monopolistic competition
1. Each firm has large _____________________________ - percent of total sales in the market
C. Few firms due to high _______________________________- expenses of entering market
III. Structure of an Oligopoly: The MOST COMMON NONCOMPETITIVE market in U.S.
A. EXISTS when _________________________________ met:
1. Dominated by ______________________________________, and they control most of the production of a product a market is considered an
oligopoly when the largest three or four sellers produce @ least ___________________________________________.
B. Sellers offer ______________________ or __________________________ products
C. _________________________________________________________________________________
IV. Oligopolies at work….
A. _________________________________________________ (differentiation through advertising) & (encouraging brand loyalty)
B. _________________________________________________ (being responsive to and dependent on the prices of competitors) (i.e. most common
form is “___________________________________” allows others to follow)
C. ___________________________: attempts to __________________________ competition
D. ___________________________ is illegal! (_________________________ agreeing on production or _________________: viewed as
interference in competitive trade)
E. ___________________________ (illegal in U.S., NOT in global market: i.e. ___________________ Organization of Petroleum Exporting
V. Best Oligopoly Examples are…
A. Cereal & Automobiles
VI. Imperfectly Competitive Markets
A. Characteristics of a Monopoly:
1. ____________________________
i. Great deal of _______________________ over ______________________.
ii. _____________________________- businesses without competitors, can set prices
2. _________ close ____________________________ for products
3. Obstacles ___________________________ to enter market
i. Include government regulation, size, resources, & technology
VIII. 4 Types of monopolies:
A. ____________________________ monopolies- one large seller produces a good or service most _________________, convenient, and
B. ____________________________ monopolies- isolated geographic ___________________ attracts only one seller
C. ____________________________ monopolies- one producer ____________ the ___________________________ that created the market
D. ____________________________ monopolies- ______________________ is the sole _________________ of a product (i.e. public goods)
IX. Examples of the Types of Monopolies
A. Example 1: Natural Monopoly _________________________________
1. In some markets, ______________________________ to have companies competing
2. Example: public utilities that require complex systems
i. _______________________________________-- average production _________________________________________;
the more people you service cost continues to fall
3. Government (local) both ________________________ and regulates this business
B. Example 2: Government Monopoly: ___________________________________________
1. ___________________________________ runs some businesses that provide goods and services
i. private firms cannot or do not want to provide because of __________________________________
2. Example: Postal Service has sole right to deliver first-class mail
3. New services and ___________________________________________________________
i. private delivery companies FedEx, UPS, DHL, fax, email, _________________________________________________
C. Example 3: Technological Monopoly: ________________________________________
1. _________________________________- legal registration of ____________________________; gives inventor sole rights
i. enables businesses to recover costs of development
2. Monopoly lasts for a time limit of 20 years or until ________________________ invented
3. Patent let ________________________________________________ out of instant-photography market
ii. simpler _______________________________, digital cameras, cell phones, quick processing reduced its market
D. Example 4: Geographic Monopoly: ______________________________________________
1. ________________________________________ tie teams to ______________________, regions; limit number of teams
i. owners can charge __________________________________ prices, sell team merchandise
2. Physical isolation- no other supplier in area- lets _______________________________________________
3. Very _____________________________________ may not support two businesses of same type (i.e. Orlando Magic)
X. Best Monopolies Examples are…
A. Cable Television Market.
XI. Technological Monopolies at Work
A. _____________________________
1. Grants ______________________________________, works of art, music, exclusive rights to publish, duplicate, perform, display, and
___________________ their __________________________ works.
B. _____________________________
1. Grants a company or an individual exclusive rights to ______________________________, use or rent, and _______________ an invention
or discovery for 20 years in the U.S.
XII. Factors that affect prices in Oligopolies and Monopolies:
A. ______________________________________________________
B. ______________________________________________________
C. ______________________________________________________
Closure Activity #18
1. Consumers have most influence
A. & most choice in monopolistic competition.
2. Consumers have some influence
B. & little choice in perfect competition.
3. Consumers have limited influence
C. in a monopoly.
4. Producers have the most control
D. with some choice in oligopolies.