Professional Documents
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Quarter 1 – Module 1:
Differentiating Various Market
Structure
Applied Economiccs
Alternative Delivery Mode
Quarter 1 – Module 1: Title
First Edition, 2020
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the module:
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What I Need to Know This will give you an idea of the skills or
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the module.
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skill into real life situations or concerns.
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We hope that through this material, you will experience meaningful learning
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What I Need to Know
This module was designed and written with you in mind. It is here to help you
master differentiating various market structures in terms of: a number of sellers; b.
types of products; c. entry/exit to market; d. pricing power and e. others. The scope
of this module permits it to be used in many different learning situations. The
language used recognizes the diverse vocabulary level of students. The lessons are
arranged to follow the standard sequence of the course. But the order in which you
read them can be changed to correspond with the textbook you are now using.
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What I Know
Give the correct answer on the space provided before each number. Pick the
answer inside the box given below:
_________________1. The wise production and use of wealth to meet the demands or
needs of people.
_________________2. A situation wherein the amount of something available is
insufficient to satisfy the desire for it.
_________________3. Is the use of inputs to produce outputs.
_________________4. Deals with the economic behavior of the whole economy or its
aggregate such as government, business, unemployment, inflation and the like.
_________________5. Deals with the economic behavior of the individual units such
as consumers, firms, the owners of factors of productions.
_________________6. Things that you can’t live without it.
_________________7. The labor, capital, land and natural resources and
entrepreneurship that are used to produce goods and services.
_________________8. Most common use of economics is for the family.
_________________9. Desires.
________________10. Is the use of a good or service.
Lesson
1
Identifying a Market Structure
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What’s In
Write the correct letter of your answer on the space provided before each
number.
______________1. A place where there are buyers and sellers who are actively
engaged in buying and selling.
a. Market c. Mall
b. Supermarket d. Place
______________2. A market structure where there are large numbers of sellers and
buyers.
a. Perfect competition c. oligopoly
b. Monopolistic competition d. monopoly
______________3. It is a market structure in which there is only a single seller of
the product .
a. Perfect competition c. oligopoly
b. Monopolistic competition d. monopoly
______________4. Which of the following statements is NOT a statement of
“Economics as a Science”?
a. Economics has long been a popular college major for individuals who are
intending to work in business.
b. It is an organized body of truth, coordinated, arranged and systematized
with reference to certain general laws and principles.
c. Economic analysis seeks to explain economic events using some kind of
logic based on a set of systematic relations.
d. The subject matter of economics is people or societies and their behavior,
unpredictable in nature.
______________5. Which is NOT a characteristic of a monopolistic competition?
a. Large number of firms c. product differentiation
b. Difficulty in entry and exit d. price policy
_______________6. It is a market structure in which there is only a single seller of
the product .
a. Perfect competition c. oligopoly
b. Monopolistic competition d. monopoly
_______________7. This refers to the labor, capital, land and natural resources and
entrepreneurship that are used to produce goods and services.
a. Land b. resources c. capital d. labor
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_______________9. The law which states that as you continue to consume a
product, you will eventually get less additional satisfaction from each unit you
consume.
a. Law of supply c. law of diminishing marginal utility
b. b. law of demand d. none of the above
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What’s New
What are our basic daily needs? How about our wants? Where do we go to
acquire our needs/wants? People cannot live without their daily needs and
sometimes their wants. Our basic daily needs include our food, shelter and
clothing. Nowadays, our needs do not limit only to these three but it already
consists of our wants such as electricity, transportation, appliances, gadgets, as
well as internet connection among others. We buy all these in the market.
A market is a place where people go to buy their daily needs. According to
Philip Kotler, it is an area or atmosphere of potential exchange. A market is not
just a place that we used to go for buying our needs, it is where competition for
customers, consumers or buyers and sellers or producers is very much common.
As students, you are familiar with this word. In the classroom, you compete for
grades, recognition, awards and honors. There are several competitions being held
in school such as talents, sports, and other extra-curricular activities. There are
beauty contest such as the Miss Universe, Miss World, Miss Earth, Binibining
Pilipinas, etc.
A market has also its structure. A Market Structure is an
environment where buyers and sellers operate and compete in the market. A place
where there is competition. A place where there will be characteristics of the
market that affects the behavior and interaction of buyers and sellers and they can
be identified through the number of sellers, types of products, entry/exit to market,
pricing power and other terms.
There are four structures in the market. They are:
1. Perfect competition
2. Monopoly
3. Monopolistic Competition
4. Oligopoly
These market structure will be discussed in the succeeding lessons.
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What is It
A market is a place where people go to buy things that they need. A place of
competition for sellers exist. A market structure identifies how a market is made
up in terms of number of sellers, types of products, entry/exit to market, pricing
power, others terms. There are four types of market structures namely: Perfect
competition, monopoly, monopolistic competition and oligopoly.
What’s More
10
What I Have Learned
What I Can Do
Assessment
Write the correct answer on the space provided before the number.
_________________1. A place where buyers and sellers interact and compete.
_________________2. It identifies how a market is made up.
3-6 4 terms to identify a market structure.
7-10 4 types of a market structure.
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Additional Activities
Below is a two-column table. On the left, list down at least 10 basic needs of your
family while on the right is the place where you buy those needs/products.
BASIC NEEDS WHERE TO BUY(MARKET)
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Answer Key
13
What I Know
___________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
_.
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Differentiating Various Market
Lesson
2
Structure in Terms of Number of
Sellers
Now that you already know of the definition of a market and a market
structure, let us now identify a market structure in terms of the number of sellers.
What’s In
15
What’s New
16
How many sellers do this industry have?_______________ .
17
How many sellers do this industry have? ______________________.
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What is It
Perfect Competition
This is an ideal market where competition is perfect. Perfect in the sense
that sellers and buyers are /large, vying for something to sell and to buy.
Competition is perfect because everyone is knowledgeable everything about what
everyone is selling as well as its price.
Monopolistic Competition
In this market structure, there are also large/many number of buyers and
sellers but not everyone has the knowledge of what his competitor is selling. Its
sellers are lesser in number than in the perfect competition.
Oligopoly
This market structure has small/few number of sellers since capitalization
in this type of market structure needs a very huge capital investment.
Monopoly
As the name suggest, mono means one. Therefore, this market structure has
one seller selling the product or service.
What’s More
19
Here are some example of firms or industries under each type of market
structures.
Perfect Competition : agricultural products such as poultry, dairy, meat,
vegetables, rice, fish among others.
Monopolistic Competition: toothpaste, soaps, shampoos, curls, biscuits,
tissue papers, diapers, etc.
Oligopoly: Cars, Malls, Cement, telecommunications industry, fast food
chains, television/radio stations, banks, gasoline stations, etc
Monopoly: Maynilad (for Manila water consumers), Meralco (for Manila
energy consumers), Noneco (for certain parts of Negros Occidental electricity
consumers), usually public utility needs and specialized jobs.
Write the number of sellers on the opposite side below for each market
structure.
Oligopoly __________________________________
Monopoly __________________________________
What I Can Do
Below are industries/ firms and products or services. On the opposite side,
write the market structure whether it is perfect competition, monopolistic
competition, oligopoly, monopoly to the firm or industry and products or services.
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1. Jag apparel _____________________________
2. Colgate _____________________________
3. Sardines _____________________________
4. Medicines _____________________________
5. Bacolod City Water District _____________________________
6. Central Market _____________________________
7. Vallacar Transit _____________________________
(a bus company in Negros Occidental)
8. Ayala Malls _____________________________
9. Davao City Water District _____________________________
10. Mitsubishi _____________________________
Assessment
Identify what type of market structure is providing for each type of product
below.
1. Eggs
2. Water
3. News
4. Banks
5. Rice
6. Electricity
7. Softdrinks
8. Bread
9. Cigarettes
10. Pharmaceutical
Additional Activities
1. Eggs
2. Water
3. News
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4. Banks
5. Rice
6. Electricity
7. Softdrinks
8. Bread
9. Cigarettes
10. Pharmaceutical
Answer Key
What’s New
1. Many/large
2. Many/large
3. Few
4. One
What I have learned
1. Many sellers
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2. Many sellers
3. Few sellers
4. One seller
What I can do
1. Monopolistic Competition
2. Monopolistic Competition
3. Monopolistic Competition
4. Oligopoly
5. Monopoly
6. Perfect Competition
7. Monopoly
8. Oligopoly
9. Monopoly
10. Oligopoly
Assessment
1. Perfect Competition
2. Monopoly
3. Oligopoly
4. Oligopoly
5. Perfect Competition
6. Monopoly
7. Oligopoly
8. Monopoly
9. Oligopoly
10. Monopoly
Additional Activity
1. Many 6. one
2. One 7. few
3. Few 8. one
4. Few 9. few
5. Many 10. one
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What I Know
Now that you know types of market structure in terms of the number of
sellers, now let us have the market structure in terms of the types of products
being produce by the company to be sold to the consumers.
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What’s In
What type of market structure do you think produces these products listed
below:
1. Chocolates ________________________________________
3. Vegetables ________________________________________
4. Water ________________________________________
5. Paracetamol ________________________________________
6. Shoes ________________________________________
8. Fruits ________________________________________
9. Aluminum ________________________________________
What’s New
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What products do you think this market produces? ______________________
26
What product do you think this market produces? _____________________
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What is It
Perfect Competition
In a Perfect Competition market, products are homogeneous where many
sellers are offering the same products to buyers. Sellers are in the same place
where buyers go and every one in the place knows what kind of products are being
sold and how much is the price therefore, competition is perfect. Products being
sold in this market structure are agricultural products like vegetables, meat,
poultry, rice, fish, among others.
Monopolistic Competition
Products being produced here are differentiated but highly substituted. Just
like the image of shampoos above, there are many types of shampoos in the
market, differentiated but they can be substituted with other brands if the other
brand is not available. Just like with the brands of soaps and other beauty
products, they can be identified through the benefits they provide to their
customers.
Oligopoly
Products in this market have similar, little or no differentiation. They can be
identified since there are just a few offering the products. Examples are cigarettes,
cars, aluminum, medicine.
Monopoly
There is a single producer with no close substitute in this type of market.
There is just one supplier for this type of product.
What’s More
Here are some example of firms or industries under each type of market
structures.
Perfect Competition : agricultural products such as poultry, dairy, meat,
vegetables, rice, fish among others.
Monopolistic Competition: toothpaste, soaps, shampoos, curls, biscuits,
tissue papers, diapers, etc.
Oligopoly: Cars, Malls, Cement, telecommunications industry, fast food
chains, television/radio stations, banks, gasoline stations, etc
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Monopoly: Maynilad (for Manila water consumers), Meralco (for Manila
energy consumers), Noneco (for certain parts of Negros Occidental electricity
consumers), usually public utility needs and specialized jobs.
In this lesson we have learned that in terms of the types of products being sold to
costumers, whether it is homogeneous or identical, similar, little differentiation or
differentiated, differentiated but substitutable, one/unique product, we can identify
a market structure.
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Answer Key
What I can do
1. Homogeneous perfect competition
2. Similar/ differentiated monopolistic competition
3. Differentiated/ substitutable oligopoly
4. Differentiated/substitutable oligopoly
5. Unique/one monopoly
6. Differentiated/similar monopolistic competition
7. Differentiated/substitutable oligopoly
8. Homogeneous perfect competition
9. Differentiated/substitutable oligopoly
10. One/unique monopoly
Assessment
1. Homogeneous perfect competition
2. Differentiated/substitutable oligopoly
3. Similar/differentiated monopolistic competition
4. Homogeneous perfect competition
5. Differentiated/substitutable oligopoly
6. Diffentiated/substitutable oligopoly
7. Differentiated/substitutable oligopoly
8. Differentiated/substitutable oligopoly
9. Homogeneous perfect competition
10. Differentiated/substitutable oligopoly
What I Know
30
Now that you already know the market structure in terms of its types
of products being produced or sold to the market, let us learn the types of
market structure in terms of its entry and exit to market.
Lesson
Differentiating Market Structure in
4 terms of entry and exit to market
What’s In
Below are products being sold in the market. State whether the entry and exit to
market of these products is difficult (with barriers), or easy (without barriers).
For difficult (with barriers) answer, please state what do you think are those
barriers.
Products Difficult/Easy Possible Barriers
1. Appliances _____________________ _____________________
2. Construction firms ________________________ _____________________
3. Sugarcane ________________________ _____________________
4. Airlines ________________________ _____________________
5. Fitness Gym ________________________ _____________________
6. Resorts ________________________ _____________________
7. Laundry shops ________________________ _____________________
8. Hotel and Restaurants ________________________ _____________________
9. Rice retail ________________________ _____________________
10. Grocery store ________________________ ____________________
What’s New
31
Barriers to entry are hindrances or obstacles that make it difficult for a firm
or individual to enter a given market. These are the reasons why other firms or
individual who would like to put up a business fails. Below are the most common
barriers to entry into a given market.
1. Government regulation. This is one barrier for someone who would like
to start up a business. Before someone can start up a business, he/she has to
seek for government’s approval in the form of a business permit or license to
operate. If the government requires so many requirements for an individual to
operate a business, this would be a barrier to that person/firm.
2. Start- up costs. Initial Capital or capital investment is large if for example
you wanted to put up a factory for sardines. You have to construct a factory
building, buy for machines, employ a large number of employees (casual or
permanent), and so on and so forth.
3. Technology. Technology nowadays is very much important in business
but its acquisition needs a huge amount of money if you wanted to employ or use
technology in your business. Though this can be very useful, this can also be a
barrier to entry of some of the business.
4. Economies of scale. An existing radio or television stations are more
prominent and successful than those who would like to start up a business. They
are already stable and have their consumers who have their loyalty with them while
new ones would mean more advertisement, promotion and other costs
accompanied by the starting up of a new business.
What is It
32
There are barriers to entry of some of the types of market structure but there
are those who do not have. Let’s see if what type of a market structure is easy or
difficult to enter and leave the market.
1. Perfect competition. There is no barrier to enter with this type of market
structure. Anyone can join with the market or start-up a business since its entry
and exit is easy.
2. Monopolistic competition. There is no or little barrier to entry with this type of
market structure. Its little barrier may be an amount of money to be used for
advertisement and promotion since products being sold here are almost similar but
differentiated in terms of the value and use it will offer to its consumers.
3. Oligopoly. Entry to this market structure is difficult. There are a number of
barriers to those who would like to enter into this type of market structure such as
huge amount of capitalization, economies of scale, control over raw materials,
among others.
4. Monopoly. Here, entry and exit is very difficult or blocked so that no other
seller or producer can enter the market for competition. Barriers to entry are
stringent government regulations huge amount of capitalization and lack or control
of raw materials.
What’s More
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1. Sea products __________________ ________________________
2. Subdivisions __________________ ________________________
3. Poultry products __________________ ________________________
4. Mining industry __________________ ________________________
5. Water __________________ ________________________
6. Toothpaste __________________ ________________________
7. Farm products __________________ ________________________
8. Grocery stores __________________ ________________________
9. Construction firms __________________ ________________________
10. Soft drinks __________________ ________________________
What type of market structure has no barriers or easy to entry and exit ? Give
example and explain why
__________________________________________________________________________________
_______________________________________________________________.
What type of market structure has barriers or difficult to entry and exit? Give
example and explain why
__________________________________________________________________________________
________________________________________________________________.
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What type of market structure has a barrier or almost blocked to entry and exit?
Give example and explain why
__________________________________________________________________________________
________________________________________________________________.
What I Can Do
If you were to choose a market structure in terms of barriers to entry and exit,
what type of market structure would you prefer? Why? Explain your answer.
Assessment
There are several reasons to barriers to entry and exit of a certain products.
In each situation below, state whether it because of government regulations,
economies of scale, supply of raw materials, or large amount of capitalization.
_______________________ 1. Mr. De Juan wanted to put up a gasoline station. He
already has a lot and an amount of money enough to construct the gasoline station
but he has difficulty in looking for supplier of fuel and oil.
________________________2. There is an existing factory for wine in a province at the
north. At the southern part, Mr Lobres wanted to put up another wine factory but
the government did not allowed Mr. Lobres to put up another one because the
residents in that particular place did not give the Environmental Compliance
Certificate for the project.
________________________3. It is the dream of a young entrepreneur Ms. Young to
put up a prestigious beauty salon in their place. But this beauty salon she wants
to have a franchise with requires her to put up an amount not enough at the
moment.
________________________4. Dorothy and Rhodora are siblings who wanted to put
up a fast food chain. There are already several prestigious fast food chain with a
35
name in the place. This is now the reason why Dorothy and Rhodora are having
a hard time in planning for strategies that they will use to compete with the well-
known fast food chains.
Additional Activities
Give at least five (5) firms/industries/markets and state whether its barriers
are easy or difficult or blocked. For difficult or blocked barriers, state its reason
behind.
1. _________________________________________________________________
2. _________________________________________________________________
3. _________________________________________________________________
4. _________________________________________________________________
5. _________________________________________________________________
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Answer Key
What’s In?
1. Difficult huge capitalization
2. Difficult huge capitalization
3. Difficult huge amount of capitalization/economies of scale
4. Difficult huge amount of capitalization/economies of scale
5. Easy huge amount of capitalization/economies of scale
6. Difficult huge amount of capitalization/economies of scale
7. Easy
8. Difficult huge amount of capitalization/economies of scale
9. Easy
10. Easy
What’s More
1. Perfect competition easy
2. Oligopoly difficult
3. Perfect competition easy
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4. Oligopoly difficult
5. Monopoly difficult/blocked
6. Monopolistic competition easy
7. Perfect competition easy
8. Perfect competition easy
9. Oligopoly difficult
10. Oligopoly difficult
What I Know
You have learned from the previous lesson that there are possible barriers to
entry and exit of a particular market structure. What are they?
___________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
______________________________________________.
What’s In
Answer the correct letter of your choice to the space provided before each number.
___________1. The seller has the complete power over the price of the product.
A. Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
___________2. The seller has some control over the price of the product depending
on the quality and product differentiation.
A. Perfect competition C. Oligopoly
C. Monopolistic competition D. Monopoly
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____________3. The seller of this market structure agrees for the price of the
products since they are interdependent with each other.
A. Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
____________4. Buyers and sellers in this market structure do not have the impact
on the price-setting of the product.
A. Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
What’s New
Illustration 1 . In a wet market, those who are selling fishes, vegetables and fruits
knows the price of each of the products. Everyone has the knowledge of the prices
of the goods one is selling. Also, customers know that everything in that place has
almost the same price, all that he has to do is to find something that he/she sees
the good is of good quality. Here, constant customers “suki” plays a big role in
getting a good revenue. But who has the power over the price of the product? Why
do you say so?
_________________________________________________________________________.
Illustration 2. Noneco is an electric company in the Northern part of Negros
Occidental. It is the sole producer of electricity power from San Carlos city up to
EB Magalona. What do you think is the pricing power of Noneco? Why do you say
so? ________________________________________________________________________.
Illustration 3. Mc Donalds and Jollibee are two biggest fast food chain in the
country. They have to employ promotions and advertisement in order to catch up
for customers. What do you think is the pricing power of these two fast food
chains? Aside from promotions and advertisements, what more could they employ
to gain and attract more customers?
__________________________________________________________________________________
______________________________________________________________.
39
__________________________________________________________________________________
_______________________________________________________________.
What is It
40
company to jack up prices of their goods since consumers don’t have any choice
but to consume their product because they are the only one selling or producing it.
The company here is free to set its price therefore, the government has to have a
law that will protect the consumers if ever the company tends to give a much
higher price of their product.
What’s More
Below are products or companies. Write down on the space provided whether
it is a price taker or a price setter. Also, write the market structure on the blank
provided after.
Product/company Price setter/price taker Market structure
1. Beauty soap ___________________ ____________________
2. Oil companies ___________________ ____________________
3. Rice retail ___________________ ____________________
4. Pharmaceutical companies ___________________ ____________________
5. Vegetables ___________________ ____________________
6. Detergent soap ___________________ ____________________
7. Railway transit ___________________ ____________________
8. Sugarcane factories ___________________ ____________________
9. Fruits ___________________ ____________________
10. Motorcycle ___________________ ____________________
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What I Have Learned
Price is determined by whether the seller or the buyer. On the side of the
seller, it is whether he sets the price or he takes the price set by the buyer. Below
are market structure. Put a check on the box if the market structure as a seller
sets the price or takes the price.
Perfect Competition
Monopolistic Competition
Oligopoly
Monopoly
What I Can Do
Give at least three products or companies under each Market structure and
write whether it is a price- setter or price-taker.
1. Perfect competition
______________________ ________________________
_______________________ ________________________
_______________________ ________________________
2. Monopolistic competition
________________________ ________________________
_________________________ _________________________
_________________________ _________________________
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Assessment
On the left side of the table below are products or companies. Write down
on the next box the market structure and whether it sets the or takes the price.
Products/companies Market structure Sets the price/takes the
price
1. notebooks
2. cement
3. appliances
4. cellphones
5. electricity
6. cigarettes
7. cars
8. meat
9. fruits
10. Ready to wear
clothes
Additional Activities
Make a summary of the things that you have learned in this lesson. Write
your answer on the space provided below.
___________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
.
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Answer Key
What’s In
1. D
2. C
3. C
4. A
What’s More
1. Price-setter monopolistic competition
2. Price-setter monopolistic competition
3. Price-taker perfect competition
4. Price-setter oligopoly
5. Price- taker perfect competition
6. Price -setter monopolistic competition
7. Price - setter monopoly
8. Price-setter oligopoly
9. Price-taker perfect competition
10. Price-setter oligopoly
Assessment
1. Monopolistic competition sets the price
2. Monopolistic competition sets the price
3. Oligopoly sets the price
44
4. Oligopoly sets the price
5. Monopolistic competition sets the price
6. Oligopoly sets the price
7. Oligopoly sets the price
8. Perfect competition takes the price
9. Perfect competition takes the price
10. Monopolistic competition sets the price
45
What I Know
Write the correct letter of your choice on the space provided before each number.
_________1. A market structure that sells homogeneous or identical products.
A. Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
_________2. A market structure who controls the price because he is the only
supplier or seller of the product/service.
A. Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
_________3. A market structure which is difficult for its entry or exit because of
barriers such as economies of scale, large capitalization, etc.
A. Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
_________4. A market structure which has similar but differentiated products being
offered to the market. These products are so many in the market.
A. Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
_________5. A market structure where government intercedes because they may set
a very high price of the product since they are the only one selling the product.
A. Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
_________6. A market structure in which they set and agree for the price of their
products because they are interdependent with each other.
A. Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
_________7. A market structure which needs a large amount of capitalization to
finance for their factories, machineries and manpower as well as advertising and
promotion.
A. Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
__________8. A market structure where it is easy for entry and exit.
A. Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
__________9. A market structure wherein it is difficulty for its entry and exit
because of the rare source of its raw materials and blocked by the government.
A. Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
__________10. A market structure which sets the price for its similar but
differentiated products.
A. Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
46
Lesson Differentiating Market Structure in
6 other terms
What’s In
There are already four (4) terms that would differentiate a market structure
from each other. They are?
1.
2.
3.
4.
What do you think are the other terms that would differentiate a market
structure from each other?
What’s New
Aside from the terms that can differentiate a market structure stated above,
there are still other terms to help us identify a market structure.
What do you think are still the things that you wanted to know about the
market structure? Is it how a market structure is managed? Or is it how being
known to the customers and competitors? Also, What do you think of the curve of
the demand and supply of each market structure?
Another two (2) terms in which a market structure can be identified is
through the
1. degree of knowledge of economic agents regarding prices, costs,
demand and supply conditions; and
2. the demand and supply curve of each market structure.
These two (2) cannot all be observed in all of the market structures, these
are just additional terms that can help us identify and differentiate a market
structure.
47
What is It
X Quantity
48
2. Monopolistic Competition. This market structure has also a
downward sloping line. This suggests that if the firm wanted to sell more in the
market, he has to lower its price.
Price Y
P1 --------------------
X Quantity
Q Q1
The arrows represent that if there will be firs coming out as a close
substitute of the product, the demand curve shifts to the left which means the
demand for such product will decrease. But if there will no close substitute for the
product, the demand for the product increases therefore the curve shifts to the
right.
3. Oligopoly. This market structure has a sticky and inflexible or a kinked
curve. This means that markets here are interdependent with each other, if one of
the firm here changes its price, other firms revenue will also be affected. This is
why the the curve is inelastic as with the other market structures.
Price Y d
P _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _P
O M output X
Upper P is more elastic in the presumption that if one firm changes its price
to a more lower one and if other firms do not change its price, the firm loses its
market share. In the lower p, if all the firms change its price, there will be little
change in the revenue and change in the market share. This market structure
does not have its fixed demand and supply curve since if one firm changes its price,
other firms will also change its price since the price of the other affects other firms
also.
49
4. Monopoly. Since there is only one product in the market selling it, the
demand curve will be the same with the demand curve of the product. It is
downward sloping because of the law of demand.
Marginal Revenue (MR) is equal to the change in revenue over the change in
quantity.
* Average Revenue and Marginal Revenue are both negatively sloped
* Marginal Revenue curve lies halfway between Average Revenue curve and Y
* Average Revenue cannot be zero but Marginal Revenue can be zero or negative.
A monopolistic firms marginal revenue is not its cost. Marginal revenue is
always below its price.
50
What’s More
_________________________________________________________________________
2. Describe the graph of the four market structures.
__________________________________________________________________________________
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__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________.
What I Can Do
51
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
________________________________________________________________.
Assessment
Answer the correct letter of your choice on the space provided before each
number.
___________1. The only market structure in which information is open to all its
competitors.
A. Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
___________2. The market structure which has a sticky and inflexible demand
curve.
A.Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
___________3. The equilibrium price in this market structure is reached when the
quantity demanded equals the quantity supplied.
A.Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
___________4. The market structure which has a downward sloping curve because
if he firm wanted to sell more in the market, he has to lower its price.
A.Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
___________5. The market structure where in the demand curve of the product is
the same with the law of demand curve.
A.Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
___________6. The market structure where in the graph, upper P for the price is
more elastic the its lower p with the assumption that if one of the firms producing
the same product lowers its price and the other firms remain constant, firms who
remain constant will lose its market share.
A.Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
____________7. The market structure where both the buyers and the sellers are
both satisfied in the equilibrium price.
A.Perfect competition C. Oligopoly
52
B. Monopolistic competition D. Monopoly
____________8. The market structure wherein the seller cannot sell his/her product
beyond the selling price because there is the perfect knowledge of the price of a
certain product.
A.Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
____________9. The market structure where AR and MR are both negatively sloped.
A.Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
____________10. The market structure wherein the curve will shift to the left if the
demand for the product increases but if there is no close substitute for the product
the demand will increase and it will shift to the right.
Additional Activities
53
Answer Key
What I know
1. A 6. C
2. D 7. C
3. C 8. A
4. B 9. D
5. D 10. B
What’s In
1. Perfect Competition
2. Monopolistic competition
3. Oligopoly
4. Monopoly
Assessment
1. A 6. C
2. C 7. A
3. A 8. A
4. B 9. D
5. D 10. B
54
What I Need to Know
This module was designed and written with you in mind. It is here to help you
master differentiating various market structures in terms of: a number of sellers; b.
types of products; c. entry/exit to market; d. pricing power and e. others. The scope
of this module permits it to be used in many different learning situations. The
language used recognizes the diverse vocabulary level of students. The lessons are
arranged to follow the standard sequence of the course. But the order in which you
read them can be changed to correspond with the textbook you are now using.
1
What I Know
Give the correct answer on the space provided before each number. Pick the
answer inside the box given below:
_________________1. The wise production and use of wealth to meet the demands or
needs of people.
_________________2. A situation wherein the amount of something available is
insufficient to satisfy the desire for it.
_________________3. Is the use of inputs to produce outputs.
_________________4. Deals with the economic behavior of the whole economy or its
aggregate such as government, business, unemployment, inflation and the like.
_________________5. Deals with the economic behavior of the individual units such
as consumers, firms, the owners of factors of productions.
_________________6. Things that you can’t live without it.
_________________7. The labor, capital, land and natural resources and
entrepreneurship that are used to produce goods and services.
_________________8. Most common use of economics is for the family.
_________________9. Desires.
________________10. Is the use of a good or service.
Lesson
1
Identifying a Market Structure
2
What’s In
Write the correct letter of your answer on the space provided before each
number.
______________1. A place where there are buyers and sellers who are actively
engaged in buying and selling.
a. Market c. Mall
b. Supermarket d. Place
______________2. A market structure where there are large numbers of sellers and
buyers.
c. Perfect competition c. oligopoly
d. Monopolistic competition d. monopoly
______________3. It is a market structure in which there is only a single seller of
the product .
c. Perfect competition c. oligopoly
d. Monopolistic competition d. monopoly
______________4. Which of the following statements is NOT a statement of
“Economics as a Science”?
e. Economics has long been a popular college major for individuals who are
intending to work in business.
f. It is an organized body of truth, coordinated, arranged and systematized
with reference to certain general laws and principles.
g. Economic analysis seeks to explain economic events using some kind of
logic based on a set of systematic relations.
h. The subject matter of economics is people or societies and their behavior,
unpredictable in nature.
______________5. Which is NOT a characteristic of a monopolistic competition?
c. Large number of firms c. product differentiation
d. Difficulty in entry and exit d. price policy
_______________6. It is a market structure in which there is only a single seller of
the product .
a. Perfect competition c. oligopoly
b. Monopolistic competition d. monopoly
_______________7. This refers to the labor, capital, land and natural resources and
entrepreneurship that are used to produce goods and services.
b. Land b. resources c. capital d. labor
3
_______________9. The law which states that as you continue to consume a
product, you will eventually get less additional satisfaction from each unit you
consume.
c. Law of supply c. law of diminishing marginal
utility
d. b. law of demand d. none of the above
4
What’s New
What are our basic daily needs? How about our wants? Where do we go to
acquire our needs/wants? People cannot live without their daily needs and
sometimes their wants. Our basic daily needs include our food, shelter and
clothing. Nowadays, our needs do not limit only to these three but it already
consists of our wants such as electricity, transportation, appliances, gadgets, as
well as internet connection among others. We buy all these in the market.
A market is a place where people go to buy their daily needs. According to
Philip Kotler, it is an area or atmosphere of potential exchange. A market is not
just a place that we used to go for buying our needs, it is where competition for
customers, consumers or buyers and sellers or producers is very much common.
As students, you are familiar with this word. In the classroom, you compete for
grades, recognition, awards and honors. There are several competitions being held
in school such as talents, sports, and other extra-curricular activities. There are
beauty contest such as the Miss Universe, Miss World, Miss Earth, Binibining
Pilipinas, etc.
A market has also its structure. A Market Structure is an
environment where buyers and sellers operate and compete in the market. A place
where there is competition. A place where there will be characteristics of the
market that affects the behavior and interaction of buyers and sellers and they can
be identified through the number of sellers, types of products, entry/exit to market,
pricing power and other terms.
There are four structures in the market. They are:
5. Perfect competition
6. Monopoly
7. Monopolistic Competition
8. Oligopoly
These market structure will be discussed in the succeeding lessons.
5
What is It
A market is a place where people go to buy things that they need. A place of
competition for sellers exist. A market structure identifies how a market is made
up in terms of number of sellers, types of products, entry/exit to market, pricing
power, others terms. There are four types of market structures namely: Perfect
competition, monopoly, monopolistic competition and oligopoly.
What’s More
6
What I Have Learned
What I Can Do
Assessment
Write the correct answer on the space provided before the number.
_________________1. A place where buyers and sellers interact and compete.
_________________2. It identifies how a market is made up.
3-6 4 terms to identify a market structure.
7-10 4 types of a market structure.
7
Additional Activities
Below is a two-column table. On the left, list down at least 10 basic needs of your
family while on the right is the place where you buy those needs/products.
BASIC NEEDS WHERE TO BUY(MARKET)
8
Answer Key
References
Applied Economics by Rosemary P. Dinio, PhD and George A. Villasis
9
What I Know
___________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
_.
10
Differentiating Various Market
Lesson
2
Structure in Terms of Number of
Sellers
Now that you already know of the definition of a market and a market
structure, let us now identify a market structure in terms of the number of sellers.
What’s In
11
What’s New
12
How many sellers do this industry have? __________________.
13
What is It
Perfect Competition
This is an ideal market where competition is perfect. Perfect in the sense
that sellers and buyers are /large, vying for something to sell and to buy.
Competition is perfect because everyone is knowledgeable everything about what
everyone is selling as well as its price.
Monopolistic Competition
In this market structure, there are also large/many number of buyers and
sellers but not everyone has the knowledge of what his competitor is selling. Its
sellers are lesser in number than in the perfect competition.
Oligopoly
This market structure has small/few number of sellers since capitalization
in this type of market structure needs a very huge capital investment.
Monopoly
As the name suggest, mono means one. Therefore, this market structure has
one seller selling the product or service.
What’s More
14
Here are some example of firms or industries under each type of market
structures.
Perfect Competition : agricultural products such as poultry, dairy, meat,
vegetables, rice, fish among others.
Monopolistic Competition: toothpaste, soaps, shampoos, curls, biscuits,
tissue papers, diapers, etc.
Oligopoly: Cars, Malls, Cement, telecommunications industry, fast food
chains, television/radio stations, banks, gasoline stations, etc
Monopoly: Maynilad (for Manila water consumers), Meralco (for Manila
energy consumers), Noneco (for certain parts of Negros Occidental electricity
consumers), usually public utility needs and specialized jobs.
Write the number of sellers on the opposite side below for each market
structure.
Oligopoly __________________________________
Monopoly __________________________________
What I Can Do
Below are industries/ firms and products or services. On the opposite side,
write the market structure whether it is perfect competition, monopolistic
competition, oligopoly, monopoly to the firm or industry and products or services.
15
11. Jag apparel _____________________________
12. Colgate _____________________________
13. Sardines _____________________________
14. Medicines _____________________________
15. Bacolod City Water District _____________________________
16. Central Market _____________________________
17. Vallacar Transit _____________________________
(a bus company in Negros Occidental)
18. Ayala Malls _____________________________
19. Davao City Water District _____________________________
20. Mitsubishi _____________________________
Assessment
Identify what type of market structure is providing for each type of product
below.
11. Eggs
12. Water
13. News
14. Banks
15. Rice
16. Electricity
17. Softdrinks
18. Bread
19. Cigarettes
20. Pharmaceutical
Additional Activities
1. Eggs
2. Water
3. News
16
4. Banks
5. Rice
6. Electricity
7. Softdrinks
8. Bread
9. Cigarettes
10. Pharmaceutical
Answer Key
What’s New
5. Many/large
6. Many/large
7. Few
8. One
What I have learned
5. Many sellers
17
6. Many sellers
7. Few sellers
8. One seller
What I can do
11. Monopolistic Competition
12. Monopolistic Competition
13. Monopolistic Competition
14. Oligopoly
15. Monopoly
16. Perfect Competition
17. Monopoly
18. Oligopoly
19. Monopoly
20. Oligopoly
Assessment
11. Perfect Competition
12. Monopoly
13. Oligopoly
14. Oligopoly
15. Perfect Competition
16. Monopoly
17. Oligopoly
18. Monopoly
19. Oligopoly
20. Monopoly
Additional Activity
6. Many 6. one
7. One 7. few
8. Few 8. one
9. Few 9. few
10. Many 10. one
18
References
Applied Economics by Rosemary P. Dinio, PhD and George A. Villasis
What I Know
Now that you know types of market structure in terms of the number of
sellers, now let us have the market structure in terms of the types of products
being produce by the company to be sold to the consumers.
19
What’s In
What type of market structure do you think produces these products listed
below:
What’s New
20
What products do you think this market produces? ______________________
What is It
Perfect Competition
In a Perfect Competition market, products are homogeneous where many
sellers are offering the same products to buyers. Sellers are in the same place
where buyers go and every one in the place knows what kind of products are being
sold and how much is the price therefore, competition is perfect. Products being
21
sold in this market structure are agricultural products like vegetables, meat,
poultry, rice, fish, among others.
Monopolistic Competition
Products being produced here are differentiated but highly substituted. Just
like the image of shampoos above, there are many types of shampoos in the
market, differentiated but they can be substituted with other brands if the other
brand is not available. Just like with the brands of soaps and other beauty
products, they can be identified through the benefits they provide to their
customers.
Oligopoly
Products in this market have similar, little or no differentiation. They can be
identified since there are just a few offering the products. Examples are cigarettes,
cars, aluminum, medicine.
Monopoly
There is a single producer with no close substitute in this type of market.
There is just one supplier for this type of product.
What’s More
Here are some example of firms or industries under each type of market
structures.
Perfect Competition : agricultural products such as poultry, dairy, meat,
vegetables, rice, fish among others.
Monopolistic Competition: toothpaste, soaps, shampoos, curls, biscuits,
tissue papers, diapers, etc.
Oligopoly: Cars, Malls, Cement, telecommunications industry, fast food
chains, television/radio stations, banks, gasoline stations, etc
Monopoly: Maynilad (for Manila water consumers), Meralco (for Manila
energy consumers), Noneco (for certain parts of Negros Occidental electricity
consumers), usually public utility needs and specialized jobs.
22
In this lesson we have learned that in terms of the types of products being
sold to costumers, whether it is homogeneous or identical, similar, little
differentiation or differentiated, differentiated but substitutable, one/unique
product, we can identify a market structure.
What I Can Do
Assessment
Identify the type of market structure these products being produced or sold
to customers in terms of its types of products.
23
Product type of product type of market
structure
1. Corn ________________________ ___________________
2. Banks ________________________ ___________________
3. RTW ________________________ ___________________
4. Bananas ________________________ ___________________
5. Malls ________________________ ___________________
6. Hollow blocks ________________________ ___________________
7. Motorcycles ________________________ ___________________
8. Laptops ________________________ ___________________
9. Flower pots ________________________ ___________________
10. Appliances ________________________ ___________________
Additional Activities
Give at least two products being sold to the market in terms of the
types of products as homogeneous, similar/differentiated,
differentiated/substitutable, one or unique product in consideration to its
type of market structure.
24
Answer Key
What I can do
11. Homogeneous perfect competition
12. Similar/ differentiated monopolistic competition
13. Differentiated/ substitutable oligopoly
14. Differentiated/substitutable oligopoly
15. Unique/one monopoly
16. Differentiated/similar monopolistic competition
17. Differentiated/substitutable oligopoly
18. Homogeneous perfect competition
19. Differentiated/substitutable oligopoly
20. One/unique monopoly
Assessment
11. Homogeneous perfect competition
12. Differentiated/substitutable oligopoly
13. Similar/differentiated monopolistic competition
14. Homogeneous perfect competition
15. Differentiated/substitutable oligopoly
16. Diffentiated/substitutable oligopoly
17. Differentiated/substitutable oligopoly
18. Differentiated/substitutable oligopoly
25
19. Homogeneous perfect competition
20. Differentiated/substitutable oligopoly
References
What I Know
Now that you already know the market structure in terms of its types
of products being produced or sold to the market, let us learn the types of
market structure in terms of its entry and exit to market.
Lesson
Differentiating Market Structure in
4 terms of entry and exit to market
26
What’s In
Below are products being sold in the market. State whether the entry and
exit to market of these products is difficult (with barriers), or easy (without
barriers). For difficult (with barriers) answer, please state what do you think are
those barriers.
Products Difficult/Easy Possible Barriers
11. Appliances _____________________ _____________________
12. Construction firms ________________________ _____________________
13. Sugarcane ________________________ _____________________
14. Airlines ________________________ _____________________
15. Fitness Gym ________________________ _____________________
16. Resorts ________________________ _____________________
17. Laundry shops ________________________ _____________________
18. Hotel and Restaurants ________________________ _____________________
19. Rice retail ________________________ _____________________
20. Grocery store ________________________ _____________________
27
What’s New
Barriers to entry are hindrances or obstacles that make it difficult for a firm
or individual to enter a given market. These are the reasons why other firms or
individual who would like to put up a business fails. Below are the most common
barriers to entry into a given market.
5. Government regulation. This is one barrier for someone who would like
to start up a business. Before someone can start up a business, he/she has to
seek for government’s approval in the form of a business permit or license to
operate. If the government requires so many requirements for an individual to
operate a business, this would be a barrier to that person/firm.
6. Start- up costs. Initial Capital or capital investment is large if for example
you wanted to put up a factory for sardines. You have to construct a factory
building, buy for machines, employ a large number of employees (casual or
permanent), and so on and so forth.
7. Technology. Technology nowadays is very much important in business
but its acquisition needs a huge amount of money if you wanted to employ or use
technology in your business. Though this can be very useful, this can also be a
barrier to entry of some of the business.
8. Economies of scale. An existing radio or television stations are more
prominent and successful than those who would like to start up a business. They
are already stable and have their consumers who have their loyalty with them while
new ones would mean more advertisement, promotion and other costs
accompanied by the starting up of a new business.
28
What is It
There are barriers to entry of some of the types of market structure but there
are those who do not have. Let’s see if what type of a market structure is easy or
difficult to enter and leave the market.
5. Perfect competition. There is no barrier to enter with this type of market
structure. Anyone can join with the market or start-up a business since its entry
and exit is easy.
6. Monopolistic competition. There is no or little barrier to entry with this type of
market structure. Its little barrier may be an amount of money to be used for
advertisement and promotion since products being sold here are almost similar but
differentiated in terms of the value and use it will offer to its consumers.
7. Oligopoly. Entry to this market structure is difficult. There are a number of
barriers to those who would like to enter into this type of market structure such as
huge amount of capitalization, economies of scale, control over raw materials,
among others.
8. Monopoly. Here, entry and exit is very difficult or blocked so that no other
seller or producer can enter the market for competition. Barriers to entry are
stringent government regulations huge amount of capitalization and lack or control
of raw materials.
29
What’s More
30
What I Have Learned
What type of market structure has no barriers or easy to entry and exit ? Give
example and explain why
__________________________________________________________________________________
_______________________________________________________________.
What type of market structure has barriers or difficult to entry and exit? Give
example and explain why
__________________________________________________________________________________
________________________________________________________________.
What type of market structure has a barrier or almost blocked to entry and exit?
Give example and explain why
__________________________________________________________________________________
________________________________________________________________.
What I Can Do
If you were to choose a market structure in terms of barriers to entry and exit,
what type of market structure would you prefer? Why? Explain your answer.
31
Assessment
There are several reasons to barriers to entry and exit of a certain products.
In each situation below, state whether it because of government regulations,
economies of scale, supply of raw materials, or large amount of capitalization.
_______________________ 1. Mr. De Juan wanted to put up a gasoline station.
He already has a lot and an amount of money enough to construct the
gasoline station but he has difficulty in looking for supplier of fuel and oil.
________________________2. There is an existing factory for wine in a province at the
north. At the southern part, Mr Lobres wanted to put up another wine factory but
the government did not allowed Mr. Lobres to put up another one because the
residents in that particular place did not give the Environmental Compliance
Certificate for the project.
________________________3. It is the dream of a young entrepreneur Ms. Young to
put up a prestigious beauty salon in their place. But this beauty salon she wants
to have a franchise with requires her to put up an amount not enough at the
moment.
________________________4. Dorothy and Rhodora are siblings who wanted to put
up a fast food chain. There are already several prestigious fast food chain with a
name in the place. This is now the reason why Dorothy and Rhodora are having
a hard time in planning for strategies that they will use to compete with the well-
known fast food chains.
32
Additional Activities
Give at least five (5) firms/industries/markets and state whether its barriers
are easy or difficult or blocked. For difficult or blocked barriers, state its reason
behind.
6. _________________________________________________________________
7. _________________________________________________________________
8. _________________________________________________________________
9. _________________________________________________________________
10. _________________________________________________________________
33
Answer Key
What’s In?
11. Difficult huge capitalization
12. Difficult huge capitalization
13. Difficult huge amount of capitalization/economies of scale
14. Difficult huge amount of capitalization/economies of scale
15. Easy huge amount of capitalization/economies of scale
16. Difficult huge amount of capitalization/economies of scale
17. Easy
18. Difficult huge amount of capitalization/economies of scale
19. Easy
20. Easy
What’s More
11. Perfect competition easy
12. Oligopoly difficult
13. Perfect competition easy
14. Oligopoly difficult
15. Monopoly difficult/blocked
16. Monopolistic competition easy
17. Perfect competition easy
18. Perfect competition easy
19. Oligopoly difficult
20. Oligopoly difficult
References
34
What I Know
You have learned from the previous lesson that there are possible barriers to
entry and exit of a particular market structure. What are they?
___________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
______________________________________________.
Lesson
Various Market Structure in Terms of Pricing Power
5
What’s In
Answer the correct letter of your choice to the space provided before each number.
___________1. The seller has the complete power over the price of the product.
___________2. The seller has some control over the price of the product depending
on the quality and product differentiation.
B. Perfect competition C. Oligopoly
F. Monopolistic competition D. Monopoly
____________3. The seller of this market structure agrees for the price of the
products since they are interdependent with each other.
35
C. Perfect competition C. Oligopoly
D. Monopolistic competition D. Monopoly
____________4. Buyers and sellers in this market structure do not have the impact
on the price-setting of the product.
C. Perfect competition C. Oligopoly
D. Monopolistic competition D. Monopoly
What’s New
would hire someone to have a feasibility study of the needs of customers that would
make him buy the product? Because if that product is really a need of a person,
he/she will buy it whatever it costs. How does pricing power affect the revenue as
Illustration 1 . In a wet market, those who are selling fishes, vegetables and fruits
knows the price of each of the products. Everyone has the knowledge of the prices
of the goods one is selling. Also, customers know that everything in that place has
almost the same price, all that he has to do is to find something that he/she sees
the good is of good quality. Here, constant customers “suki” plays a big role in
getting a good revenue. But who has the power over the price of the product? Why
_________________________________________________________________________.
36
Illustration 2. Noneco is an electric company in the Northern part of Negros
Occidental. It is the sole producer of electricity power from San Carlos city up to
EB Magalona. What do you think is the pricing power of Noneco? Why do you say
so? ________________________________________________________________________.
Illustration 3. Mc Donalds and Jollibee are two biggest fast food chain in the
for customers. What do you think is the pricing power of these two fast food
chains? Aside from promotions and advertisements, what more could they employ
__________________________________________________________________________________
______________________________________________________________.
Negros Occidental, there are only three (3) sugarcane factories. How will this
__________________________________________________________________________________
_______________________________________________________________.
What is It
37
his products to the price of the products of his competitors so that he will not be
left out with the sale of his products. For example, the price of the tomato per kilo
in the market is Php50.00, the buyers know that everyone who is selling tomatoes
in the place is selling it at the cost of Php50.00.
Monopolistic Competition. Here, perfect and monopolistic competition is
combined where products are differentiated and entry and exit are easy. Since
customers love to have a variety of goods to choose from, products in this market
structure are differentiated. Products are differentiated by its brand, model, style
and many other features that the company will see to it that his product is unique
from the other offers in the market. Therefore, the company can set or control over
the price and quantity of the product because of its unique characteristic though it
is just the same with the other products but certainly not identical. Let’s say for
example in toothpaste, there is this toothpaste with salt, charcoal, lime, among
others as choices that will suit to the need and taste of some individual. There is
also this so- called as for sensitive, for whitening, for stronger teeth, etc.
In this market structure, the company is the price-setter.
Oligopoly. In this market structure where there are several barriers to entry
and exit, the action of each firm affects each other. Companies of the same
products agree and fix the price of their product since whatever price they will put
to it, customers will still have to buy for it since it is a need or necessity.
Companies here sets for the price of the product. For example, oil companies if you
notice have almost the same oil prices. This is because oil companies agree for the
price of the oil as maintained by the OPEC (Organization of Petroleum Exporting
Countries).
Monopoly. Since only a single seller sells the product, consumers always
have a bad image of this type of market structure. Consumers’ perceived the
company to jack up prices of their goods since consumers don’t have any choice
but to consume their product because they are the only one selling or producing it.
The company here is free to set its price therefore, the government has to have a
law that will protect the consumers if ever the company tends to give a much
higher price of their product.
What’s More
Below are products or companies. Write down on the space provided whether
it is a price taker or a price setter. Also, write the market structure on the blank
provided after.
Product/company Price setter/price taker Market structure
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11. Beauty soap ___________________ ____________________
12. Oil companies ___________________ ____________________
13. Rice retail ___________________ ____________________
14. Pharmaceutical companies ___________________ ____________________
15. Vegetables ___________________ ____________________
16. Detergent soap ___________________ ____________________
17. Railway transit ___________________ ____________________
18. Sugarcane factories ___________________ ____________________
19. Fruits ___________________ ____________________
20. Motorcycle ___________________ ____________________
Price is determined by whether the seller or the buyer. On the side of the
seller, it is whether he sets the price or he takes the price set by the buyer. Below
are market structure. Put a check on the box if the market structure as a seller
sets the price or takes the price.
Perfect Competition
Monopolistic Competition
Oligopoly
Monopoly
What I Can Do
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Give at least three products or companies under each Market structure and
write whether it is a price- setter or price-taker.
5. Perfect competition
______________________ ________________________
_______________________ ________________________
_______________________ ________________________
6. Monopolistic competition
________________________ ________________________
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
Assessment
On the left side of the table below are products or companies. Write down
on the next box the market structure and whether it sets the or takes the price.
Products/companies Market structure Sets the price/takes the
price
11. notebooks
12. cement
13. appliances
14. cellphones
15. electricity
16. cigarettes
17. cars
18. meat
19. fruits
20. Ready to wear
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clothes
Additional Activities
Make a summary of the things that you have learned in this lesson. Write
your answer on the space provided below.
___________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
.
Answer Key
What’s In
5. D
6. C
7. C
8. A
What’s More
11. Price-setter monopolistic competition
12. Price-setter monopolistic competition
13. Price-taker perfect competition
14. Price-setter oligopoly
15. Price- taker perfect competition
16. Price -setter monopolistic competition
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17. Price - setter monopoly
18. Price-setter oligopoly
19. Price-taker perfect competition
20. Price-setter oligopoly
Assessment
11. Monopolistic competition sets the price
12. Monopolistic competition sets the price
13. Oligopoly sets the price
14. Oligopoly sets the price
15. Monopolistic competition sets the price
16. Oligopoly sets the price
17. Oligopoly sets the price
18. Perfect competition takes the price
19. Perfect competition takes the price
20. Monopolistic competition sets the price
References
Applied Economics by Rosemary P. Dinio, PhD and George A. Villasis
42
What I Know
Write the correct letter of your choice on the space provided before each
number.
_________2. A market structure who controls the price because he is the only
supplier or seller of the product/service.
_________3. A market structure which is difficult for its entry or exit because of
barriers such as economies of scale, large capitalization, etc.
_________4. A market structure which has similar but differentiated products being
offered to the market. These products are so many in the market.
_________5. A market structure where government intercedes because they may set
a very high price of the product since they are the only one selling the product.
_________6. A market structure in which they set and agree for the price of their
products because they are interdependent with each other.
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D. Monopolistic competition D. Monopoly
__________9. A market structure wherein it is difficulty for its entry and exit
because of the rare source of its raw materials and blocked by the government.
__________10. A market structure which sets the price for its similar but
differentiated products.
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Lesson Differentiating Market Structure in
6 other terms
What’s In
There are already four (4) terms that would differentiate a market structure
from each other. They are?
5.
6.
7.
8.
What do you think are the other terms that would differentiate a market
structure from each other?
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What’s New
Aside from the terms that can differentiate a market structure stated above,
there are still other terms to help us identify a market structure.
What do you think are still the things that you wanted to know about the
market structure? Is it how a market structure is managed? Or is it how being
known to the customers and competitors? Also, What do you think of the curve of
the demand and supply of each market structure?
Another two (2) terms in which a market structure can be identified is
through the
3. degree of knowledge of economic agents regarding prices, costs,
demand and supply conditions; and
4. the demand and supply curve of each market structure.
These two (2) cannot all be observed in all of the market structures, these
are just additional terms that can help us identify and differentiate a market
structure.
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What is It
X Quantity
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6. Monopolistic Competition. This market structure has also a
downward sloping line. This suggests that if the firm wanted to sell more in the
market, he has to lower its price.
Price Y
P1 --------------------
X Quantity
Q Q1
The arrows represent that if there will be firs coming out as a close
substitute of the product, the demand curve shifts to the left which means the
demand for such product will decrease. But if there will no close substitute for the
product, the demand for the product increases therefore the curve shifts to the
right.
7. Oligopoly. This market structure has a sticky and inflexible or a kinked
curve. This means that markets here are interdependent with each other, if one of
the firm here changes its price, other firms revenue will also be affected. This is
why the the curve is inelastic as with the other market structures.
Price Y d
P _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _P
O M output X
Upper P is more elastic in the presumption that if one firm changes its price
to a more lower one and if other firms do not change its price, the firm loses its
market share. In the lower p, if all the firms change its price, there will be little
change in the revenue and change in the market share. This market structure
does not have its fixed demand and supply curve since if one firm changes its price,
other firms will also change its price since the price of the other affects other firms
also.
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8. Monopoly. Since there is only one product in the market selling it, the
demand curve will be the same with the demand curve of the product. It is
downward sloping because of the law of demand.
Marginal Revenue (MR) is equal to the change in revenue over the change in
quantity.
* Average Revenue and Marginal Revenue are both negatively sloped
* Marginal Revenue curve lies halfway between Average Revenue curve and Y
* Average Revenue cannot be zero but Marginal Revenue can be zero or negative.
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A monopolistic firms marginal revenue is not its cost. Marginal revenue is always
below its price.
What’s More
_________________________________________________________________________
4. Describe the graph of the four market structures.
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________.
50
What I Can Do
Assessment
Answer the correct letter of your choice on the space provided before each
number.
___________1. The only market structure in which information is open to all its
competitors.
C. Perfect competition C. Oligopoly
D. Monopolistic competition D. Monopoly
___________2. The market structure which has a sticky and inflexible demand
curve.
A.Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
___________3. The equilibrium price in this market structure is reached when the
quantity demanded equals the quantity supplied.
A.Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
___________4. The market structure which has a downward sloping curve because
if he firm wanted to sell more in the market, he has to lower its price.
A.Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
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___________5. The market structure where in the demand curve of the product is
the same with the law of demand curve.
A.Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
___________6. The market structure where in the graph, upper P for the price is
more elastic the its lower p with the assumption that if one of the firms producing
the same product lowers its price and the other firms remain constant, firms who
remain constant will lose its market share.
A.Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
____________7. The market structure where both the buyers and the sellers are
both satisfied in the equilibrium price.
A.Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
____________8. The market structure wherein the seller cannot sell his/her product
beyond the selling price because there is the perfect knowledge of the price of a
certain product.
A.Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
____________9. The market structure where AR and MR are both negatively sloped.
A.Perfect competition C. Oligopoly
B. Monopolistic competition D. Monopoly
____________10. The market structure wherein the curve will shift to the left if the
demand for the product increases but if there is no close substitute for the product
the demand will increase and it will shift to the right.
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Additional Activities
53
Answer Key
What I know
6. A 6. C
7. D 7. C
8. C 8. A
9. B 9. D
10. D 10. B
What’s In
5. Perfect Competition
6. Monopolistic competition
7. Oligopoly
8. Monopoly
Assessment
6. A 6. C
7. C 7. A
8. A 8. A
9. B 9. D
10. D 10. B
References
Applied Economics by Rosemary P. Dinio, PhD and George A. Villasis
https://www.youtube.com/watch?v=ZhGDce_a5eE
https://www.youtube.com/watch?v=8a3gXThQek0
Marketstructure…0430142231.pdf
Economicthoughtswithglenn.blogspot.com/2012/comparingmarketstructure.html
Study.com
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