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Warm Up: Why does competition influence price?

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Warm Up: Why does competition influence price? Look over the products at your desks. Identify the firms competition in its industry (as a lot, a little, or none). – PowerPoint PPT presentation

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Title: Warm Up: Why does competition influence price?


1
Warm Up Why does competition influence price?
  • Look over the products at your desks. Identify
    the firms competition in its industry (as a lot,
    a little, or none). And then put the products in
    order from most to least competition.

2
Market Structures
  • The NATURE and DEGREE of COMPETITION among firms
    in the same industry
  • There are 4 Market Structures
  • 1. Perfect Competition
  • 2. Monopolistic Competitioin
  • 3. Oligopoly
  • 4. Monopoly

3
Make a Table in your notes
Perfect Competition Monopolistic Competition Oligopoly Monopoly
Products Are
Level of Competition
Control over Price
Advertising
Example
4
PERFECT COMPETITION
  • Products Are
  • Identical, no name brands
  • Competition
  • Lots of small competitors
  • Control Over Price
  • No control over price
  • Advertising
  • No need, No way to distinguish.

5
MONOPOLISTIC COMPETITION
  • Products Are
  • Similar, with name brands
  • Competition
  • Lots of competitors
  • Control Over Price
  • Some Control when consumer is brand loyal
  • Advertising
  • Lots to create differentiations

6
OLIGOPOLY
  • Products Are
  • Similar, with name brands
  • Competition
  • FEW major competitors
  • Control Over Price
  • Some, when consumers are loyal
  • Advertising
  • Much, to beat out rival differentiate

7
MONOPOLY
  • Products Are
  • Unique
  • Competition
  • None
  • Control Over Price
  • Total
  • Advertising
  • No need

8
Create a list
  • Write down 4 different goods for each of the
    Market Structures that we discussed yesterday.
    Use your white boards and discuss with your groups

9
Spectrum of Demand
Perfect Competition
Monopoly
Monopolistic Competition
Oligopoly
Inelastic a change in price results in a little
to no change in quantity demanded, few to no
substitutes
Elastic a change in price results in a large
change in quantity demanded, many substitutes
10
Cut Paste Logo Time
  • Each group has in front of them
  • Paste, scissors and numerous company logos
  • Each student must cut and paste at least 6
    different companies and place them on the
    spectrum varying their elasticities.

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