Unit 3: Competition, Market Structures, and the Role of Government
Date: ______
Economists ask many questions to determine market structures, or the nature and degree of competition among firms operating in the same industry.
Four market structures have been identified – pure competition, monopolistic competition, oligopoly, and monopoly.
Directions:
Complete the chart below using the attached reading.
Perfect Competition
Market Structure
Pure Competition
Imperfect Competition
Monopolistic
Competition
Oligopoly
Monopoly
*Products can be standardized
*No close substitutes
How many firms
are in the Industry?
What degree of influence
do individual firms have
over price?
Product Differentiation
identical-similar
different-unique?
*Differences can be
real or perceived
Do firms use advertising
and other types of “nonprice” competition?
(At least 2 examples)
Is it easy or difficult for
new firms to enter this
market?
Examples
(At least 2 more)
1. Table Salt
2.
3.
Natural Monopoly
Market situation where the costs of
production are minimized by having a
single firm produce the product.
- Water, gas, electric companies
1. Jean Companies
2. Shoe Companies
3.
4.
Geographic Monopoly
Based on the absence of other sellers in
a certain geographic area.
- Only drugstore in a small town
- Only gas station on a highway
1. Banks
2. Airlines
3.
4.
Technological Monopoly
Based on ownership or control of a
manufacturing method or process.
*if you can a patent on the product, no
one can legally produce it
- Blu Ray Disc?
1. Diamonds
2.
*see below for
4 specific types of monopolies
Government Monopoly
Found at the national, state, and local
levels, and involve products/services
that the private sector cannot provide.
- Local water authority / State Stores
- Uranium processing for weapons