5/3 Warm-Up
Make sure name, date, and period are on papers, and pass
forward 22.1 and 23.1.
1. According to the Law of Supply, when will
the supply of a product likely decrease?
2. The point where quantity demanded and
quantity supplied are equal is called what?
Understanding Supply and
Demand

Finish the supply and demand practice on p.
255 and 256 of your manual.

Note: You will use the grid to graph supply,
demand and a shift in supply and a shift in
demand. (4 curves)
Understanding Supply and Demand
S1
Price $
S2
.60
E2
.50
.40
E1
.30
.20
.10
D1
0
50
100
Quantity
150
200
250 300 350
D2
Market Structures & Business
Organizations p. 257-258
Objective: Differentiate
between market structures
and business organizations
through class notes and the
creation of a foldable review
Market Structure
PERFECT COMPETITION




Many buyers and sellers in the market
sellers offer identical products
Buyers and sellers are well informed
about products
sellers are able to enter and exit the
market freely
Market Structure
PERFECT COMPETITION
Commodity: a product that is the same no
matter who produces it
 Example: milk, notebook paper, petroleum
Perfectly competitive markets are efficient
at equilibrium!!
Market Structure
PERFECT COMPETITION
Few markets are perfectly competitive
because barriers keep the companies from
entering or leaving markets easily
- start-up costs are high
- many require high degrees of technology
Market Structure
MONOPOLY

A market dominated by a single seller

No variety of goods and the seller has
complete control over prices

Forms when barriers prevent firms from
entering a market with only one seller
MONOPOLY

Natural monopoly- a market that runs most
efficiently when one large firm provides all
the output.
EXAMPLE: utilities- public water, electricity
Market Structure
MONOPOLY
Government Monopoly: a monopoly created by
the government
Ex: allowing a natural monopoly to form
Ex: patent: inventor of the new product has
exclusive rights to sell it
Ex: Franchise: contract issued by a local authority
that gives a single firm the right to sell its goods
within an exclusive market
(Remember one of the goals of the government in the US has
been to encourage competition in the economy)
Market Structure
MONOPOLY


Antitrust laws: laws that encourage
competition in the market
(Example: Sherman Antitrust act: banned
monopolies and other business combinations
that prevented competition 1890)…this act
was used to break up
companies like AT&T
Trusts and Monopolies
Rockefeller’s Standard Oil
Carnegie’s US Steel
Market Structure
OLIGOPOLY
Oligopoly: a market structure in which a few
large firms dominate a market (3 or 4 largest
firms produce 70-80% of the output)
 barriers can also create oligopolies…like
start-up costs and technology
32%
50%
48%
45%
13%
Market Structure
MONOPOLISTIC COMPETITION

Monopolistic Competition: a market structure in
which many companies sell products that are
similar but not identical. Many firms, but each with a
small market share, highly competitive, very elastic demand.
Monopolistic
Competition
Oligopoly
Monopoly
# of firms
Many
Few dominate
One
Variety of goods
Some
Some
None
Control over prices
Little
Some
Complete
Barriers to entry
Low
High
Complete
Examples
Jeans,
restaurants
Movie studios
Public water
OTHER VOCABULARY



Communism: a political system characterized by a
centrally planned economy with all economic and
political power resting in the hands of the central
government (command)
Socialism: a system in which the government owns
some factors of production and distributes wealth
among citizens (command, mixed)
Capitalism: a system in which private citizens own
most, if not all, of the means of production and
decide how to use them with legislated limits
(market)
Leave it to Beaver
Answer the questions you copied earlier to turn
in after the episode.
Water, Anyone?
LEAVE IT TO BEAVER:
1. Does Wally WANT or NEED $3.98? Why?
2. How does Wally plan to earn this money?
3. What is Beaver’s incentive to earn money?
4. Originally, why was there no demand for water?
5. Why does the quantity of water demanded increase?
6. Why is Beaver able to raise the price?
7. What is the term for the driving force behind Beaver’s attempt
to be successful? _P__________ _M_________
8. What type of market has Beaver created? _________
9. What are the 4 Factors of Production for Beaver’s Water
Business
Homework


Complete Goal 8A review, pp. 271-272
Study for quiz on Supply and Demand
FOLDABLE INSTRUCTIONS
FOLDABLE ACTIVITY
Foldable
Activity:
See handout for
directions
You will need:
Glue
Scissors
1 white sheet and
1 colored sheet of
paper
12/9 Warm-Ups

1.
2.
After you finish today’s warm-ups, pass
forward.
In a competitive market, how are prices
set?
What is a market dominated by a few
large profitable firms?
Bonus ?
Apple sued whom, claiming they ripped off their
iPad/iPhones?