FrontPage: NNIGN
LAWTON, Okla.-Strange moments for a
local restaurant Friday night when one
patron couldn't pay for her dinner or
drinks. Police say Kristi Rhines ordered
several alcoholic drinks and food at El
Chico in Lawton but later said she had no
way to pay for them. She told managers
her husband was on his way to pick up the
tab.
When asked about her husband, she told
them she was legally married to Jesus
Christ, but had no marriage license. She
also told management that Jesus would be
able to walk in and produce U.S. currency
to pay for her bill.
Police confirmed that Rhines had no way
of paying for her tab. She was booked into
the Lawton City Jail on a complaint of
fraud.
Woman arrested claiming
Jesus Christ will pay her
restaurant tab
The Last Word: No homework
Chapter 7
• Terms used to describe the level of
competition in a market.
• Perfect Competition
• Imperfect Competition
• Monopoly
• Monopolistic Competition
• Oligopoly
• 1. Many buyers and sellers:
– A large number of buyers and sellers
ensures that no one controls prices.
• 2. Standardized product:
– All products are essentially the same.
• 3. Freedom to enter and exit markets:
– Producers can enter or exit the market
with no interference.
• 4. Independent Buyers and Sellers:
– Buyers and sellers do not band
together to influence prices.
• 5. Well-informed buyers and sellers:
– Both buyers and sellers know the
market prices and other conditions.
• Monopoly
– Types of monopoly
• Monopolistic
competition
• Oligopoly
• 1. Only One Seller:
– A single business
controls the supply of a
product that has no
close substitutes.
• 2. A Restricted,
Regulated Market:
– Govt. regulations or
other barriers to entry
keep other firms out of
the market.
• 3. Control of Prices:
– Monopolies act as price
makers because they sell
products that have no
close substitutes and
they face no
competition.
• Natural monopoly:
– Occurs when the costs of
production are lowest
with only one producer.
– May occur because of
economies of scale – the
avg. cost of production
falls as the producer
grows larger
• Government monopoly:
– exists when the govt.
either owns and runs the
business or authorizes
only one producer.
• Technological monopoly:
– occurs when a firm
controls a manufacturing
method, invention, or
type of technology.
• Geographic monopoly:
– Exists when there are no
other producers within a
certain region.
• 1. Many buyers and sellers:
– Fewer sellers than perfect
comp., but still enough for
meaningful competition.
• 2. Similar but differentiated products:
– Use brand name and advertising to
differentiate from competitors
Big N’ Tasty
Whopper
Classic
• 3. Limited
Control of Price:
– Product
differentiation
gives producers
some control
over what they
charge.
• 4. Freedom to Enter or Exit Market:
– Does not require huge amounts of
capital; can sell off equipment and
other assets if doing poorly
• Five Guys Burgers with Fast
Food Mania
• 5 Questions for Five Guys
from Forbes
Oligopoly
• 1. Few Sellers and
Many Buyers:
– A few firms dominate
the market
– Exists if top 4 firms
control at least 40% of
market
Oligopoly
• 2. Standardized or
Differentiated
Products:
– Standardized: steel,
aluminum, glass
– Diff.: cereals, soft
drinks
Oligopoly
• 3. More control of
prices:
– Because there are few
sellers, they have more
control than in
monopolistic comp.
– However, price changes
will affect whole market.
– Less likely to compete
based on price.
Oligopoly
• 4. Little Freedom to
Enter or Exit Market:
– Start-up costs are
extremely high for
factories,
warehouses, etc.
– Existing firms may
also hold patents
# of
Type of Product Seller’s
Sellers
Control
over
Prices
Perfect
Many Standardized
Competition
Monopolistic Many Similar, but
Competition
differentiated
Oligopoly
Few
Monopoly
One
Barriers
to Enter
or Exit
Market
None
Few
Limited
Few
Standardized for Some
Many
industry,
differentiated
for consumers
Standardized,
Significant Very
but no close
Many
substitutes
• Market Structure with MJMFoodie