Write down the names of three
companies:
1.
Company with very little
competition.
2.
Company with two to three
major competitors.
3.
Company with many
competitors.
 Which situation do you think
describes most markets in
the United States?

 Perfect Competition – also known as pure competition, large number of firms
producing essentially the same product (most competitive)
 No participants are large enough to have the market power to set the price of a
product.
Buyers and sellers are so numerous that no one buyer/seller has any influence
over the market price
Firms are thus price takers
Price is determined purely by supply and demand
Four Conditions:
1. Many buyers and sellers
2. Goods offered for sale are exactly the same/identical
3. Buyers and sellers have access to information about products
4. Sellers are able to enter the market freely; no barriers to entry
Commodity - basic good with little differentiation from one product to the next with
multiple producers selling the same product
Tomatoes
Oranges
Wheat
Corn
Onions
Plants/trees
Crude Oil
Stock Market






Monopoly - when one company controls
the market of a good/service and can
effectively dictate prices(least competitive)

Microsoft (90’s), NFL, China’s Pandas,
Comcast, etc.

Complete barrier to entry
Government Monopolies – a monopoly
intentionally created by the government
Patent – gives a company exclusive rights
to sell a new good or service for a specific
period of time
Copyright – the right to control the written
word, intellectual property such as lyrics,
music, logos, slogans, etc.
Franchise – the right to sell a good or
service within an exclusive market (cable
TV, power company, water, etc.)
License – a government issued right to
operate a business (liquor license,
gasoline, etc.)


Price discrimination – dividing customers
into groups and charging each customer
a different amount
Market Power – ability to control prices
and total market output
Monopolistic Competition – many
companies selling similar products but not
identical
 Market for Jeans in the U.S.
Four Conditions of Monopolistic Competition
1.
Many firms
2.
Few artificial barriers to entry
3.
Slight control over price
4.
Differentiated products (main difference
between perfect and monopolistic
competition)


Oligopoly – a market structure in which a few large firms dominate a market; a few of
the largest firms produce at least 70-80% of the output.
 Automobile industry, commercial airlines, beer industry, cartels, web browsers,
smart-phones, etc.
 Characteristics:
 High Barriers to Entry
 Collusion – businesses work together to price fix, agreement to set prices
 Price Fixing – agreement among firms to sell at the same or very similar prices
 Cartel – a formal organization of producers that fix prices and control supply
(OPEC)
Rules of the game:
•Monopolies occur when a player acquires all of one property color or all of the utilities
1. Once a player has declared their monopoly to the government, a monopoly can
charge any price they wish for their properties (price discrimination may occur).
2. The government (Coach L) must be notified of any monopoly.
3. Other members of the market (other players) can voice complaints to the
government regarding unfair price increases or inconsistent monopoly practices.
4. Responses to complaints can include fines, restrictions on ability to operate for
certain amounts of time (ie: monopolies can only occur for two turns around the
board), price ceilings or in extreme cases, jailings or breaking up of monopolies.
•Oligopolies can form when a group of two or more players have all the properties of
one color between them.
1. As an oligopoly you can charge any price you wish for your properties; you ALL
must agree on the price.
2. Once you set the price, you may not change it until two rounds have passed.
Rules of the game:
•Monopolies occur when a player acquires all of one property color or all of the utilities
1. Once a player has declared their monopoly to the government, a monopoly can charge any price
they wish for their properties (price discrimination may occur).
2. The government (Coach L) must be notified of any monopoly.
3. Other members of the market (other players) can voice complaints to the government regarding
unfair price increases or inconsistent monopoly practices.
4. Responses to complaints can include fines, restrictions on ability to operate for certain amounts of
time (ie: monopolies can only occur for two turns around the board), price ceilings or in extreme
cases, jailings or breaking up of monopolies.
•Oligopolies can form when a group of two or more players have all the properties of one color between
them.
1. As an oligopoly you can charge any price you wish for your properties; you ALL must agree on the
price.
2. Once you set the price, you may not change it until two rounds have passed.
•Borrowing and Saving:
1. You might want to determine a way to incorporate the principles of the saving and lending into your
market. Example:
1. The center of the board acts as the loanable funds market.
2. Each round you must alternate as a saver and a borrow.
3. Government policies state that you can save 10% of your gross income; you can borrow up to
30% of your income (saved money can be collected 3 rounds after it is saved, borrowed money
must be repaid + interest after 4 rounds from the time borrowed).
4. After each player has completed a round, the interest rate will be set based up on the amount
of loanable funds in the market (i.e. 200 – 10%, 300 – 8%, 500 – 5%, 1000 – 2%, etc.
5. One person should keep track of the loanable funds that are borrowed and saved each round
and payouts to players (this money should come from the loanable funds market or the bank).
Chapter 7 – Market Structures Monopoly Game
Rules of the game:
•Monopolies occur when a player acquires all of one property color or all of the utilities
1. Once a player has declared their monopoly to the government, a monopoly can charge any price they
wish for their properties (price discrimination may occur).
2. Monopolies will be regulated by the government.
3. Any player holding more than one monopoly should be notified by the market to the government for
their unique ability to influence or control the game; this may increase government oversight.
4. Other members of the market (other players) can voice complaints to the government regarding
unfair price increases or inconsistent monopoly practices.
5. Responses to complaints can include fines, restrictions on ability to charge certain players,
restrictions on ability to operate for certain amounts of time (ie: monopolies can only occur for two
turns around the board, or until a certain amount of money has been made), price ceilings or in
extreme cases, jailings or breaking up of monopolies.
•Oligopolies can form when a group of two or more players have all the properties of one color between them.
1. As an oligopoly you can charge any price you wish for your properties; you ALL must agree on the
price.
2. Once you set the price, you may not change it until two rounds have passed.
•Government Regulation:
1. The government will intervene on its own, or respond to complaints from players throughout the
game.
2. A complaint should come from overpricing, crooked business deals and unfair business practices.
3. Lottery will be all the fines throughout the game place in the center of the game board.
Item
Tic-Tacs
Characteristic Number of
of the Item
Firms
Identical
Jolly Ranchers Slight difference
Tootsie Pops
PayDay
Slight difference
One Item
Market
Structure
Examples in
the Real
World
Many
Perfect
Competition
Commodities
(Onions, Oil,
Gold, etc.)
Many
Monopolistic
Competition
Jeans, Watches,
Fast Food, etc.
A Few
One
Oligopoly
Monopoly
Auto/Airline
industry, Web
Browers, etc.
Microsoft, NFL,
Comcast,
China’s Pandas,
etc.
Reflection Questions Monopoly
1. Has anyone formed a monopoly or
oligopoly? Explain how this has
affected the game.
2. How can monopolies/oligopolies affect
the real economy? Explain.
3. Has anyone used the concept of price
discrimination? What are examples of
this in the real world?
4. How did government regulation affect
the game; who gained who lost?
5. What makes a monopolistically
competitive market structure different
from a perfectly competitive market
structure?
Government Regulation
1. Redistribution of Wealth - the top 2 earners for each
market must pay a 10% tax to each additional
member of group (ex. $2000, $200 to each member)
2. Government Stimulus - The poorest 2 members of
the market are awarded a stimulus of $1000, the rest
of the members receive a stimulus of $500
3. Taxes on the Rich - The player with the most
properties must pay $100 tax to each member of the
group
Government Regulation
1. Each person involved in a monopoly must forfeit one of their
properties back into the pool. Each member receives $200
stimulus.
2. Tax cuts for the rich: the two richest members of the group
receive $500 each, the remaining members have to pay $100 to
the middle of the board.
3. Each member of a monopoly must pay a one time tax of $500
to the center of the board. Additionally, they are to serve 1
rounds in jail for abusing market power.
Record the Following
1. Position on the board
2. Money for each player
3. Money in the Lottery
4. Properties owned and houses built
1.
2.
3.
4.
5.
6.
Describe the four examples of price
discrimination listed in the book
(targeted discounts, pg. 163)
Define Nonprice competition (167).
Describe the four examples of
nonprice competition (pg. 167-168)
Describe the four conditions of
monopolistic competition (pg. 167)
Define cartel (171).
Define antitrust laws and trust (173).
Condition
Description
1. Many Buyers and Sellers
Many firms, no firm
can gain an advantage
in the market
2. Identical Products
No difference between
the products sold by
different suppliers
3. Informed Buyers and
Sellers
People know what
they should be paying
for the product.
4. Free Market Entry and
Exit
Easy to enter or leave
the market
Example(s)
Agricultural industry,
stock market
Commodities, tomatoes,
corn, low-grade gasoline,
notebook paper, and milk
(tic-tacs).
Buyers incentive to
save is based on time
spent to gather info.
Market for frozen
dinners
Condition
Description
1. Discounted Airline Fares
Cheaper rates for
certain fliers.
2. Manufacturers Rebate
Offers
3. Senior Citizen or Student
Discounts
4. Children Fly or Stay Free
Promotions
Example(s)
Cheaper rates for
buying in advance,
spending a Saturday
night.
Receive money back
from the supplier.
Refrigerators, cars,
tvs, etc.
Lower rate for
older/younger people.
Zoos, theaters,
restaurants, etc.
Lower rates for families
with children because
they travel less.
Food discounts (kids eat
free), clothing, school
expenses, vacations,
etc.
Condition
Description
1. Physical Characteristics
Brand differentiation
based on size, color,
shape, texture, taste, etc.
Running shoes, pens,
cars, toothpaste, jeans,
etc.
2. Location
Goods can be
differentiated based on
where they are sold.
Gas stations, movie
theaters, scarcity of land.
Sell for a higher price,
because of their high
level of service.
Restaraunt vs. fast
food, Publix, Disney,
etc.
Advertising can create
differences between
products.
Hanes vs. Fruit of the
Loom t-shirt.
3. Service Level
4. Advertising, Image or
Status
Example(s)
Statement
Concept (s)
Explanation
1. Jane can purchase a share of
Microsoft stock from Smith Barney or
Schwab. There is no difference in the
price of the product.
Perfect
Competition
Identical Products
2. GM, Ford and Chrysler comprise 80%
of the market share for automobiles.
Oligopoly
Few companies have market
power
3. It is nearly impossible to compete
with the NFL .
Monopoly
4. In the market for cell phones, there
are a number of different companies to
select from.
Monopolistic
Competition
One company has market power
5. OPEC controls the world’s supply of
oil.
Cartel, Collusion,
Price-fixing
6. Cilantros offers free meals to children Price
under 12.
Discrimination
7. Publix uses the slogan, “where
shopping is a pleasure”, to differentiate
their products.
8. Microsoft used its market power to
illegally force companies to not use
Netscape browsers.
Non-Price
Competition
Anti-trust laws
Similar but different products
Several businesses collude to
control prices
Companies charge different
prices for different consumers
Service levels differentiate or
other non-price factors to
appeal to the consumer
Microsoft used their market
power to illegally push Netscape
out of business
Perfect
Competition
Monopolistic
Competition
Oligopoly
Monopoly
Number of
Firms
Many
Many
A Few
One
Variety of
Goods
None
Some
Some
None
Control Over
Prices
None
Some
Some
Complete
Low
High
Complete
Barriers to
Entry
Examples
None
Commodities –
Agriculture,
Stocks
Jeans, Fast
Food,
Toothbrushes
Automobile/Airline
Industry, Smart
Phone,
Web Browsers
Microsoft 90’s,
NFL, Cable
What is a trust similar to?
2. What law prevents monopolies
and mergers that limit trade?
3. How have some companies used
strategies to control their
market?
4. What was the end result of the
antitrust case against Microsoft?
5. What major companies were
broken up by the government?
6. What merger was denied in
1997?
7. What does deregulation refer to?
8. What are some industries that
have been deregulated?
9. How did deregulation affect
some states in the 1990s?
1.
1. Perfect
Competition
2. Monopoly
3. Patent
4. Oligopoly
5. Collusion
6. Monopolistic competition
7. Sole Proprietorship
8. Partnership
9. Corporation
10.Price Discrimination
11.Market Power
12.Cartel
Perfect Competition
2. Many buyers and sellers, identical Products (price takers), informed
consumers/sellers, low barriers to entry (enter and exit easily)
3. Barriers to entry
4. Monopoly
5. Natural
6. The monopoly can dictate prices (unstable)
7. Patent
8. Government
9. License
10. Price discrimination
11. Market power
12. Monopolistic
13. Many firms, low barriers to entry, brand differentiation, slight control over price
14. Physical characteristics, location, service level, advertising image or status
1.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
Oligopoly
Collusion/price fixing
Anti-trust
Microsoft
Business organization
Sole proprietor
Partnership
General
Limited
Limited liability
Articles of partnership
Corporation
Sole proprietorship
Corporation
Stock
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
Partnership
Sole proprietorship
Closely held
Publicly held
Partnership
Corporation
Multinational
Horizontal
Vertical
Conglomerate
Franchise
Cooperative
Consumer
Service
Producer
1. Business
Organizations Chart
2. Google Video Questions
3. Market Structures Simulation
4. Chapter 7/8 Study Guide
5. Chapter 7/8 Crossword Puzzle
6. Notes
7. VIS Terms Chapter 7/8
8. Daily Tens
1. Name
2. Date
(3-15)
3. Class Block
4. ID: A, B or C
5. Chapter 7 + 8 Test
1. List
5 examples of
commodities
2. What are a few things
that would make working
for Google unique?
3. Which of the 4 market
structures does the
United States most
closely resemble? Explain
your answer.