Market systems jeopardy review (1)

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5 10Monopolies

Oligopolies

Monopolistic Competition

MISC

Perfect

Competition

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Team OneTeam One

Team TwoTeam Two

Team ThreeTeam Three

Team FourTeam Four

Team FiveTeam Five

Team SixTeam Six

Why can a monopolist raise prices without

fear of losing customers?

Show Answer

Because for the most part, buyers would

have nowhere else to go for that particular

good or service

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Sergio has just released the hit single, “Gangsta thug

Paradise.” If he is 12 years old, and dies when he’s 85.

How many years does he own the rights to the song?

Show Answer

Rest of author’s life + 70 years

73 + 70 = 143

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We can assume because there is only one firm in a

Monopoly, that there are intense barriers to entry.

Name two barriers to entry in a Monopoly

Show Answer

• Copyrights

• Patents

• Immense costs of starting a business

• State laws and regulations Back to Board

There are four characteristics of a

Monopoly. Name 2 of them

Show Answer

• A Single Seller

• No Substitutes

• Immense Barriers to entry

• Complete control of the market

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There are four types of Monopolies. They are

categorized by the reason the monopoly exists. Give three of

the four

• Natural Monopolies: Government grants exclusive rights to companies like

transportation, utilities, or military.

• Geographic Monopolies: Location of market and potential for profits are too

small for other firms to enter

• Technological Monopolies: Patents and Copyrights. Patents exists for 20 years, copyrights for the life of author plus 70

years

• Government Monopolies: Very similar to Natural Monopolies. The only difference

is that the Government controls itBack to Board

How many firms can there be in an

Oligopolistic Market?

Show Answer

The prefix “Oli” means few. If you can count

the number of firms on two hands, it’s

probably an Oligopoly

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What percent of the market do Oligopolies

usually own or are responsible for?

Show Answer

Oligopoly firms are extremely large and

own 70 to 80 percent of the market

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Give three examples of a firm participating in

an Oligopolistic Market

Show Answer

Cellphone Carriers

Video Game Market

Cereal

Drug Cartels of Latin America

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What is Non-Price Competition?

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Advertisements will focus on minor

differences in goods or services instead of the

price

Explain why Game Theory is specifically geared towards

Oligopolies. Think…why can’t we create a Game Theory matrix with a monopoly? Why not with a farm

in Perfect Competition?

Show Answer

Game Theory is a mathematical way of predicting the moves of firms. Game theory only works

with Oligopolies because decisions firms make can actually impact each other, as opposed to

Perfect competition.

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What is one example of a market in a

Monopolistically Competitive Market?

Show Answer

• Clothing and other Apparel

• Fast Food Restaurants

• Tech like Computers/Tablets

• Coffee Shops

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How do firms in Monopolistic

Competition control the market price of

products?

Show Answer

M.C. Markets have a little control over the

price. They can do this through establishing

customer loyalty

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What is the major financial way firms in a

Monopolistically Competitive market establish Customer

loyalty?

Show Answer

Competitive Advertisements

Firms will spend countless millions of dollars into creating

catchy, and clever advertisements in hopes that

consumers will acknowledge and continually purchase their

products.

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There are basically two schools of thought in regards to the way

people pay for brand name items. What are

they?

Show Answer

• Brand name companies hurt consumers by charging more, just for the name associated with the

product

• Brand names can represent a guarantee of quality of a particular

good or service

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What is Differentiation and give an example of this in the market place

Show Answer

Differentiation is when particular products are slightly different from other similar products.

Or basically

Firms will convince consumers that their products are different,

and therefore better for themBack to Board

Before we categorized businesses by the # of

owners. How do we categorize businesses in Market Structure?

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Market structure is organized by how much competition they face

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What is one example of a market that is

Perfectly Competitive?

Agriculture and Farming

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What is a patent, and what is an example of a US Patent?

Show Answer

A Patent gives you a technological monopoly over your

own invention. They give you exclusive rights to make, rent, or sell your invention for 20 years

Razor, Refrigerator, Diesel Engine

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What is Competition and who is it

specifically between?

Competition is the rivalry between entrepreneurs of

similar products. If products are not similar there is NO competition.

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Competition between firms has very

attractive benefits to consumers. Name three ways competition helps

us

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• Competition forces prices to be low

• Competition forces companies to innovate

• Competition gives consumers choices

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What can be said about the number of firms in a Perfectly Competitive

Market?

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There are numerous buyers and sellers. We

can say there are hundreds and in some

cases thousands

Show Answer

How much power does a firm in a Perfectly

competitive firm have in affecting the price?

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Firms have NO influence on the price.

If one firm raises the price, consumers can

just buy from someone else

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What can we assume about the barriers to entry in a Perfectly

Competitive Market if we look at the number

of firms there?

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Because there are so many different firms, we can assume that there are NO barriers to

entry in a Perfectly Competitive market.

How common are Perfectly Competitive markets in the U.S.?

Show Answer

Perfectly Competitive markets are relatively rare. Most firms are

either Oligopolies or in Monopolistic Competition. There

are few true Monopolies and Perfect Markets.

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There are 5 conditions that need to be met for a Perfectly Competitive

market. Name three

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• Large Market – Many buyers and sellers

• Identical Products

• Easy Entry and Exit from the Market (No Barriers)

• Easily Obtainable Information

• Independence. Buyers and Sellers cannot work together to affect price

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Show Question

What is either Empire Carpet’s Number, or

Luna’s Number?

Show Answer

302928272625242322212019181716151413121110987654321

• Empire: 800-588-2300

• Luna: 773-202-LUNA (5268)

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