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Essential Question:Essential Question: Identify the two types of highly competitive

markets, describe the four conditions required for Perfect competition and explain why it doesn’t exist, Define the goal of monopolistic competition, and describe the ways that sellers attempt to achieve a monopoly

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Two types of highly competitive marketsTwo types of highly competitive marketsPerfect (pure) competition is a market structure

in which buyers and sellers each compete directly and completely under the laws of supply and demand making the same products.

Monopolistic competition is different as producers attempt to make different products than their competition or make similar products SEEM different.

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4 Conditions for Perfect Competition4 Conditions for Perfect Competition

Many Independent Buyers and SellersSellers offer Identical ProductsBuyers are well informed about productsSellers can enter/exit market easily

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Perfect Competition vs. MonopolisticPerfect Competition vs. Monopolistic Problem with Perfect Competition? IT DOESN’T EXIST!!!

Sellers are greedy and want to increase the number of buyers in order to make more profit.

Buyers want the best products at the lowest possible price

In order to satisfy both, sellers attempt to make different products than their competitors OR make similar products appear to be different

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The Goal of Monopolistic The Goal of Monopolistic competitioncompetition Eliminate your competition and create a market

structure known as a monopoly A monopoly is a market structure with only one

seller. In order to do this, sellers must take buyers away

from their competitors through a variety of ways: Non-price competition, differentiation, and advertising.

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Sellers competingSellers competingSellers of similar product know that price is

usually the biggest factor in a buyers decision.

Since lowering prices means lowering profits, sellers differentiate their products from one another by advertising and focusing on the differences (real or implied)

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Non-Price CompetitionNon-Price Competition In order to gain more customers, while

maintaining a profitable price, consumer practice Non-Price Competition such as Commercial Advertising to increase their market share.

Highly Competitive MarketsHighly Competitive MarketsSECTION 1