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sec. 1-3
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* A market structure in
which a large number
of firms all produce
the same product
* There are FOUR
major conditions that
make up perfect
competition
*
* 1.) Many Buyers and
Sellers (B/S)
* 2.) Sellers offer
identical products
* 3.) Buyers and sellers
are well informed
* 4.) Sellers are able to
enter and exit the
market freely
* How is price and output determined in a
market place?
* Supply and Demand
* Why Would having many buyers and sellers get
us close to perfect competition?
* No individual can be powerful enough to
influence the total market (monopoly)
* Market is determined without influence from
individuals.
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* No difference between the
products sold by suppliers
* Known as a Commodity: a
product that is the same no
matter who produces it. Ex:
petroleum, notebook paper,
milk…Ketchup or Catsup 
* How does this help the
market place?
* We will always choose the
supplier with the lowest
price
* Creating equilibrium
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* Know enough about the market place to get
the best deal possible.
* For the Buyer having information helps them
make the best choice possible
* For the seller being transparent and offering
out information allows them to bring buyers
into their store.
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* Must be able to enter when they can make
money and exit when they can’t earn enough
to stay in business.
* More competition keeps prices low
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* Create Imperfect Competition
* Barriers to Entry are any factors that make it
difficult to enter a market place
* Major Barriers:
* Start-Up Costs
* Technology
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* From the research you have done thus far…
* How much will it cost you to get your business
off the ground?
* Start-Up Costs: are the costs you must pay
before you can begin to actually produce
goods for sale.
* Markets with High Start-Up Costs are less likely
to be perfectly competitive.
* https://www.calcxml.com/do/bus02
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* How is Technology both a barrier to entry and a
helpful tool?
* Barrier to Entry:
* Some jobs and market places require a lot of
training and skill to enter.
* High degree of technological know-how
* Helpful?
* In our new age we have the ability to enter
markets more easily. Music, books, ex: Itunes,
Etsy,
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* Monopoly: a market dominated by a single
seller
* One Seller MANY buyers
* Problems with Monopolies?
* Charge Higher Prices
* Quantity of goods sold is lower (Law of Demand)
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* Allowed by the
Government in some
cases
* Natural Monopolies: a
market that runs
most efficiently when
one large firm
provides all the
output.
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* Created by the Government
* How do they do this?
* Patents: Gives a company exclusive rights to sell a
new good or service for a specific period of time
* Name Brand vs. Generic
* Helps to improve society when one company can do
research and gain exclusive rights.
* Franchise: a contract issued by a local authority
that gives a single firm the right tot sell its goods.
* EX: Our school using one food vendor for lunch, specific
places only selling coke or pepsi products
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* NOTES ON THE BOARD…. CHECK THIS OUT…
* Monopolistic Competition: Many companies sell
products that are similar but not identical
* Four Conditions to Monopolistic Competition
* Many Firms
* Few barriers to entry
* Slight control over price
* Con sub rivals product
* Differentiated products
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* Oligopoly: a Few large firms dominate the
market
* If four of the largest firms in a sector make at
least 70-80% of the output
* Government wants to create competition
between these companies to eliminate what
seems to be a monopoly
* Ex: airlines, breakfast cereal companies
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