Maam Nario Eco 1 Module 4
Maam Nario Eco 1 Module 4
Maam Nario Eco 1 Module 4
Module 4
TOPIC 4- Market Structures
I. Learning Outcome:
1.) Familiarize with the concept of a market
2.) Distinguish and differentiate the various market structures from each other in terms of
their characteristics
3.) Summarize the characteristics of each market structure according to the types of products
sold, the number of buyer and sellers, barrier to entry or exit, and relative price influence
in their respective industries.
II. Pre-Assessment:
Multiple Choices: Choose the correct answer from the given options.
C.1.) Monopoly is a market structure mainly characterized by
a. single buyer c. a single seller
b. few buyers d. few sellers
B. 2.) Oligopoly is a market structure mainly characterized by
a. single buyer c. a single seller
b. few buyers d. few sellers
A. 3.) Monopolistic Competition is a market structure that has
a. homogenous products c. heterogeneous & slightly differentiated products
b. standardized products d. none of the above
A. 4.) Sellers in an industry of Pure Competition are usually
a. price takers c. both a & b
b. price makers d. neither a nor b
C. 5.) Monopsony is a market structure very similar to a
a. monopoly c. pure competition
b. oligopoly d. monopolistic competition
D. 6.) It occurs when large number of sellers and procurers of a good are present in the market,
making the goods almost always available.
a. oligopsony c. pure competition
b. monopsony d. monopolistc competition
C. 7.) ______________ products are found in a perfect competition type of market structures
a. heterogeneous & standardized c. different
b. homogeneous d. branded
A. 8.) Standardized products are describes as products _____________.
a. having similar characteristics and each one does not significant differ from the oter
products
b. have the same brad, but may not be of the same kind
c. produce by only one company
d. all of the above
The forces of supply and demand need a mechanism that will facilitate exchanges
between them. The mechanism, which is called the market. Market is the place where
you can buy the goods and services you want, where buyers and sellers transact. The
prices of these goods and services are determined by the “forces” in the market and this
where a market structure comes in, or the competitive environment wherein buyers and
sellers arrive at a price in exchanging their goods and services deemed mutually
beneficial.
When buyers wishing to exchange money for a good or service are in contact with
sellers wishing to exchange goods and services for money, a market exists. A market may
be confined to a specific geographical area, like a certain town where buyers and sellers
meet. In a modern industrial economy contains many varieties of market structures,
which may be classified into regular market structures and special market structures.
The regular market structures are perfect competition, monopoly, oligopoly and
monopolistic competition or differentiated competition.
1.) Perfect competition – occurs when a large number of sellers in producers of a good
are present in the market, making the goods almost always available. The tendency in
this market structure is that there are so many firms that none of them can
individually affect the price of the product. This is a more common market structure
in many modern economies today.
Usually, homogeneous or standardized products are found in this market
structure. These products are so called homogeneous in the sense that they have
similar characteristics and each one does not significantly differ from the other
products. In many instances, these products do not carry individual brands.
Agricultural products are very good examples of these.
2.) Monopoly-in which a single firm produces the entire available products in an industry
is a market structure that is dominated by that firm. Monopoly is a special case of
imperfect competition. It is a situation in which here is only one seller in a market.
The monopolist firm usually has a very great influence over pricing and output
decisions. Such cases are rare in most market economics today.
Some regional and local firms tend to behave as a monopoly in their respective
immediate markets, especially when these firms tend to be new and the first to offer a
good or service in a specific area.
These include local or regional cable operators, power companies and water
utility firms that tend not to have competition in their area due to prohibitive costs of
3.) Oligopoly- is that market structure characterized by very few sellers in the market
making the product (s) available for the consuming public.
Since there are very few of these sellers, their price influence is great. Regulation
is more often than not necessary in an oligopolistic industry, due to the natural
tendency of collusion among these firms. These government regulations are often
geared towards encouraging these few firms to complete rather than to collude. The
oil and telecommunication industries in the Philippines are examples of this market
structure.
4.) Monopolistic competition- is a market structure in which there are enough sellers or
producers and that each acts independently of the others, but are few enough that each
tends to have a “monopoly” of its own specific target market segments. The theory of
monopolistic competition is applied to the analysis of differentiated products.
Differentiated products are those that end to be similar of nature and purpose, but
are used differently and are generally preferred by specific groups of consumers. A
very good example for this type of market structure are non-food traditional products
such as shampoo, soaps, and other cleaners. Although these products (and brands)
belong to the same category, each product tends to have its non-patrons, thereby
allowing companies to have some “monopoly” over their own respective markets.
There are two special types of market structures since they are not commonly found
in many industries nor economies.
5.) Monopsony-is very similar to a monopoly, except that instead of having a single
seller, there is a single buyer in the industry. Some governments tend to participate
his in specific and sensitive industries the purchase of armaments, nuclear technology
and the like tend to be the monopoly of many governments, assuring that these
products will not be readily available to the public for national security reasons and
measures. Although there are private groups that also buy these items secretly from
government they tend to be more of illegal than legal groups.
6.) Oligopsony-is very similar to an oligopoly, except that instead of having a few sellers
in the industry, there are only very few buyers of a particular product. Usually, there
exists a mutually beneficial relationship between oligopolists and oligopsonists. This
V. Summary /Generalization:
-The market is an important mechanism that is used to facilitate transactions between the
forces of supply and demand.
A market is a place where buyers and sellers can meet to facilitate the exchange or transaction
of goods and services. Other examples include the black market, auction markets, and
Competition is the rivalry between companies selling similar products and services with the
goal of achieving revenue, profit, and market share growth. Market competition motivates
companies to increase sales volume.
VI. Post Assessment: (Essay 2 points each)
VIII. References:
Principles of Economics by:
Azarcon, Marzo, Navarro
Resurreccion, Paca
Degay, Sison, Rojo