Download Market Structures - St. Clair Schools

Market Structures
Chapter 7
Get a Sheet of paper out
► List
the following on a half sheet of paper:
 Three
 Three
 Three
 Three
favorite
favorite
favorite
favorite
cereals
brands of shoes
brands of clothes
soft drinks
Results to the Survey………

Did all of your answers have recognizable
name recognition? I bet they did..

Why did you typically pick the ‘name brand’
over a generic brand name?
Advertising and marketing

They clearly influence our purchasing power
by consumers today.

But why???
• Its what we see every day on the television, the
internet and on the radio.
Perfect Competition

Perfect Competition, also called pure
competition is an ideal market structure
where the buyer (consumer) and the
seller (producer) each compete directly
and fully under the law of supply and
demand.

Who wins in this?........................
► The
consumer benefits
the most---that’s you--because it involves
competition which
helps fuel bringing
prices down.
Perfect Competition exists when….
1.
2.
3.
4.
Many buyers and sellers act independently
Sellers offer identical products
Buyers are well informed about products
Sellers can enter or exit the market easily
Monopoly
Monopoly: This is
a market in which a
single seller
exercises exclusive
or nearly exclusive
control over a good
or product
Monopoly

It is against the law to have a monopoly
business in the United States……
Monopoly
1982: AT&T and the Justice Department agree on
tentative terms for settlement of anti-trust suit
filed against AT&T in 1974. AT&T agrees to divest
itself of its local telephone operations.
1984: On January 1 the Bell System ceases to
exist. In its place are seven Regional Bell
Operating Companies and a new AT&T that
retains its long distance telephone,
manufacturing, and research and development
operations.
Monopoly




In 1975 Bill Gates and Steve Jobs created a new
computer business
In 1976 they got the “Microsoft” trade
name..Make $16,000
In 1978 they make there first million with the
PET Commodore
In 1979 they made
2 million
Monopoly








In 1983, Microsoft made 50 million
In 1986 the public could buy stock into Microsoft
By 1990 Microsoft made over 1 billion
In 1991, the Justice Dept. looked into whether Microsoft
was a monopoly.
By 1996, Microsoft made 8.6 billion
1997, the Justice Department files papers against
Microsoft.
1998 the trial begins against Microsoft being a monopoly
In 1999, the court ruled against Microsoft; they appealed
Monopoly




In 2000, Microsoft made 22.96 billion
In 2001, Microsoft settled w/ the gov’t agreeing
to share programming material..
In 2004 Microsoft made 38.8 billion
In 2008, Microsoft made 57 billion

Oligopoly is a market in which
a few large sellers control 70-80
percent of the production of a
good or service
Oligopoly

Oligopolies are
legal. The problem
with them is that it
limits competition
which hurts the
consumer.
Other Key Terms
 Price
War:
A series of price
reductions that
may become so
drastic that each
seller involved
suffers
considerable
losses
Price Wars



Why have them?
Businesses want your
money instead of you
going to the competitor.
They are willing to cut
into maximum profits to
get your business.
 Collusion: An effort by producers or sellers of a
particular product to secretly set production levels or
prices---which is illegal (Are oil companies doing this??)
Cartel:
A group of producers
or sellers of a certain
good or service who
unite to control
prices, output, and
market share (Are
the diamond
industries doing this)?
Merger
This happens when two or more
companies join to form one single
firm
 Why do mergers happen??
 Usually one company is struggling
and they need money-- so they
sell; sometimes an entrepreneur
wants to retire and sell the
business
 Sometimes people merge for $

Trusts:
A group of companies
that combine to
eliminate competition
in an industry and
thereby gain a
monopoly “BigBusiness”
Antitrust Legislation

Antitrust legislation
were acts or laws which
were designed to monitor
and regulate big
business, prevent
monopolies from forming
and dismantling any
existing monopolies
BIGGEST ACT (Law) of
them all………
Sherman Anti-Trust
Act: This prohibits any
agreements, contracts,
or conspiracies that
would restrain interstate
trade or cause
monopolies to form
The End