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 P

rice

$

Quantity0 50 100 150 200 250 300 350

S1

D1

E1

.60

.50

.40

.30

.20

.10

D2

S2

E2

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 formEx: patent: inventor of the new product has

exclusive rights to sell itEx: 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

50% 48%45%

32%

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 ACTIVITYFoldable Activity:

See handout for directions

You will need:

Glue

Scissors

1 white sheet and

1 colored sheet of paper

12/9 Warm-Ups

After you finish today’s warm-ups, pass forward.

1. In a competitive market, how are prices set?

2. What is a market dominated by a few large profitable firms?

Bonus ?

Apple sued whom, claiming they ripped off their iPad/iPhones?