Scribd
Upload
48 views5 pages

Applied Economics G12-L5 2nd Sem

This document is a learner's manual for a class on applied economics. It covers lessons on different market pricing structures, including perfect competition, monopolistic competition, oligopoly, and monopoly. It defines each market type and lists their key characteristics. Students are given multiple choice questions to test their understanding of the different market structures and how supply and demand affect market equilibrium.

Uploaded by

honeylyn moncatar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
48 views5 pages

Applied Economics G12-L5 2nd Sem

This document is a learner's manual for a class on applied economics. It covers lessons on different market pricing structures, including perfect competition, monopolistic competition, oligopoly, and monopoly. It defines each market type and lists their key characteristics. Students are given multiple choice questions to test their understanding of the different market structures and how supply and demand affect market equilibrium.

Uploaded by

honeylyn moncatar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 5

BF ST. MARY’S SCHOOL OF SAN JOSE INC.

Block 6 Lot 3 & 4 Section 4 Phase 1 Pabahay 2000, Brgy.Muzon


City of San Jose Del Monte, Bulacan
No. 09128512207/0995-308-7066 E-mail add: bfsms.edu@gmail.com

Name:________________________________ Grade & Section: Grade 12


Subject: Applied Economics Learners Manual: Week 4-5
Date Received: _________________________ Date Retrieved:______________

SECOND SEMESTER
Lesson 5: Differentiate Various Market Pricing on Economic Decision
Essential Questions: How does government intervention affect supply and demand?

Objectives: Differentiate market structures in terms of:


A. Number of sellers
B. Types of products
C. Entry/Exit to market
D. Pricing power

Multiple Choice: Choose the letter of the correct answer. Write it down on the space provided for in
each item.

________ 1. What is the ideal market structure?


A. Monopolistic competition C. Oligopoly
B. Monopoly D. Perfect competition
_________ 2. Which of the following market types has the fewest number of firms?
A. Monopolistic competition C. Oligopoly
B. Monopoly D. Perfect competition
_________ 3. What is the difference between perfect competition and monopolistic competition?
A. In perfect competition , firms produce identical products, while in monopolistic
competition does not.
B. Perfect competition has a large number of small firms while monopolistic competition
does not.
C. Perfect competition has barriers to entry while monopolistic competition dos not.
D. Perfect competition has no barriers to entry while monopolistic competition does not
_________ 4. Which of the following is the best example of a perfectly competitive market?
A. Athletic shoes C. Farming
B. Diamonds D. Soft drinks
__________ 5. Why is perfect competitive firms are considered as price takers?
A. Each firm is very large
B. Many other firms produce identical products.
C. Their Demand curves are downward sloping.
D. There are no good substitutes for their produc

Perfect Market and Its Features

Firstly, let’s define what market is.


What is Market?
Market refers to any place or process involved with the exchange of goods and services. There are 4 basic
types of market by traditional economic analysis and they are:
1. Perfect competition
2. Monopolistic competition
3. Oligopoly
4. Monopoly

What is Perfect Competition?


Perfect competition is characterized by many buyers and sellers, many products that are similar in nature
and, as a result, many substitutes.

Main Characteristics of Perfect Competition


1. There is perfect knowledge, with no information failure or time lags in the flow of information.
2. Given that producers and consumers have perfect knowledge, it is assumed that they make rational
decisions to maximize their self-interest.
3. There are no barriers to entry in or exit out of the market.
4. Firms produce homogeneous, identical, units of output that are not branded.
5. Each unit of input, like labor, are also homogeneous.
6. No single firm can influence the market price, or market conditions.
7. There are very many firms in the market which are too many to measure. As a result of no barriers to
entry.
8. There is no need for government regulation except to make markets more competitive.
9. There are assumed to be no externalities.
10. Firms can only make normal profits in the long run, although they can make abnormal (super normal)
profits in the short run.

Equilibrium in perfect competition is the point where market demands will be equal market supply. A
firm's price will be determined at this point. In the short run, equilibrium will be affected by demand. In
the long run, both demand and supply of a product will affect the equilibrium in perfect competition. A
firm will receive only normal profit in the long run at the equilibrium point. (Debreu, 1972)
What is Monopolistic Competition?
Monopolistic competition occurs when a large number of firms price and sell differentiated products that
are close substitutes to each other.

Features of Monopolistic Competition


The following are features of monopolistic competition.
1. Many firms: There is relatively large number of firms in the market. Such firms produce close
substitutes and compete with each other. Stiff competition exists between firms and they share market
demand.
2. Product differentiation: the products produced are not identical. They are slightly different from each
other. Despite this, they remain close substitutes, therefore, their prices are similar.
3. Freedom of entry and exit: As in perfect competition, businesses have freedom to enter and exit an
industry. When existing firms make super profits, the new firms enter the industry to produce close
substitutes and exit once these super profits are no longer available. Because of this firms in the market
earn normal profits in the long run.
4. Non-price competition: Business use means other than price to complete. This is a common feature in
monopolistic competition, so companies spend a large amount of money

What is Oligopoly?
An oligopoly is a market dominated by a few large firms. It falls between a monopoly and monopolistic
competition. In this market, a small number of firms account for a large proportion of output and
employment. Firms within the oligopoly produce branded yy and each seller competes with the others.
The actions of one firm can influence the actions of its competitors. This is called rivalry. Advertising and
marketing are important features of competition. A high degree of dependence exists among the
businesses in their decision making: firms in the market react to the behavior of their competitors. They
compete for market share using price and non-price competition. Price competition involves discounts.
Non-price competition includes special services to customers such as loyalty cards, home deliveries,
extensions of opening hours, special offers and entertainment facilities in shopping outlets. High entry
barriers exist because existing firms have achieved economies of scale.

Features of Oligopoly Market


1. A relatively small number of firms in the industry that dominate the market.
2. Differentiated products
3. Mutual interdependence of businesses
4. Relatively high barriers to entry due to economies of scale
5. Businesses in the market earn super profits in the long run Examples of oligopolies include: - Nike and
Reebok- sports shoe products

What is Monopoly?
In a monopoly market a single producer or seller of a product that has no close substitutes controls the
market. This is the least competitive situation, so it is very hard for a true monopoly to exist. A
monopolist has no competitors

Features of Monopoly
The following are the features of a monopoly market.
1. Strong barriers to entry. It is usually very difficult to keep others out of a market which is capable of
earing super profit, such as a monopoly. Government intervention may be needed in the form of legal
barriers. Other legal barriers may be formed by the use patents. Financial barriers, due to a very high
capital set-up cost, may also exist, giving rise to a natural monopoly.
2. Imperfect knowledge
3. No advertising. There is no need to defer customers away from a competitor, as there is no close
substitute good or service.
4. One seller
5. The sole seller offers a product for which there is no close substitute.
6. Strong control over price or quantity

Directions: This activity connects supply and demand to the real world. Students will read articles that
show changes in supply or demand, or simply analyze the articles’ summaries and translate the content to
the analysis of demand, supply, quantity demanded and quantity supplied, and market equilibrium. Real
World Connections: Supply and Demand Student Worksheet Remember that all changes are other things
being equal
1. DVD sales are sliding because more consumers are watching content digitally.
(This involves two markets.)

2. Consumers become more health conscious and reduce their consumption of donuts.

1. What is market?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
2. What is the difference between monopolistic competition and perfect competition? Support your
answer.
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

3. What is the service industry here in the Philippines.


_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

Prepared By: Honeylyn C. Moncatar


Subject Teacher

Approved By: Imelda C. Arias


Principal

Acknowledge By: _____________________________ Date:______________


Signature Over Printed Name

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy