Let’s
Review!
ARELLANO UNIVERSITY
JOSE ABAD SANTOS CAMPUS
BASIC EDUCATION DEPARTMENT
Various Market Structure
Week 5
(Applied Economics)
Objectives:
Differentiate market
structures in terms of:
a. Number of sellers
b. Types of products
c. Entry/exit to market
d. Pricing power
What I know (Pre-Test)
Topic: Market Structure
Directions:
Multiple choice: Choose the
letter of the correct answer.
(1 to 5 Questions)
1. There are only a few companies
in this structure and they have
control over price.
A. Oligopoly
B. Monopolistic
competition
C. Monopoly
D. Perfect competition
2. There are many sellers and
consumers in this
type of market with
almost the same products.
A. Monopolistic
competition
B. Monopoly
C. Oligopoly
D. Perfect competition
3. A market structure that there
is only a single company that
produces a certain
products in the entire market
that has no close substitutes.
A. Monopolistic competition
B. Monopoly
C. Oligopoly
D. Perfect competition
4. There are many buyers and
sellers of the product
but the product is not a perfect
substitutes in this type of
Monopolistic competition
marketA. structure.
B. Monopoly
C. Oligopoly
D. Perfect competition
5. What is the ideal market
structure?
A. Oligopoly
B. Monopolistic
competition
C. Monopoly
D. Perfect competition
What is Market?
A market is one of the numerous
infrastructures, system, institutions,
social relations, and procedures,
wherein buyers and sellers usually
interact with each other to
exchange goods and services.
What is Market?
It is also refers to any place or
process involved with the
exchange of goods and
services.
What is Market Structure?
It refers to how different
industries are classified and
differentiated based on their
degree and nature of
competition for services and
goods.
The interactions and variations in
different aspects provided the
existence of the:
Four (4) types of Market Structure
1. Monopoly
2. Monopolistic Competition
3. Perfect Competition
4. Oligopoly
Situation #1
Your friend opened a cake shop. He
then asked you to come and buy
some. You can’t complain so you
ended up buying one. Unexpectedly,
it tasted good. When you came back
there the following week, the cake
you bought last time was already
unavailable.
Monopoly
AMonopoly pertains to a situation
wherein there is only a single
company that produces a certain
product in the entire market that
has no close substitutes.
Examples of Monopoly
Features of Monopoly
1. Strong barriers to entry
2. A very high capital set-up cost
3. No advertising, as there is no close
substitute good or service.
4. One seller
5. There is no close substitute
6. Strong control over price or
Check your understanding
Direction: State if the
given situation is a
MONOPOLY or NOT.
Case # 1
Barbara went to the
market yesterday to look
for a cosmetic product.
She bought 5 pieces of it
and they all have
Case # 2
Justin owns the only Art
Shop in their town
that’s why he raised
each material’s price
and limited the
Situation #2
Isabela went to the grocery store earlier along
with her daughter named Chelsea. When they
arrived at the milk corner, she asked her
daughter.
Isabela: Baby, what milk do you want? Milk A or
Milk B?
A question then popped out of Chelsea’s mind,
and answer her mother with another question.
Chelsea: Mom, why do I need to choose? Both
are the same king anyway. Why do we have
different brand?
Monopolistic Competition
When there is a numerous quantity of
small firms completing against each
other.
There are many buyers and sellers of
the product but the product is not a
perfect substitutes.
Differs in brand, style, packaging and
Examples of Monopolistic
Competition
Features of Monopolistic
Competition
1. Many Firms.
2. Product differentiation. Slightly
different from each other.
3. Freedom of entry and exit.
4. Non price competition. Business
use other means to compete.
Check your understanding
Direction: State if the
given situation is a
MONOPOLISTIC
COMPETITION or NOT.
Case # 1
Anna wants to buy shoes
for her son, but she can’t
choose whether it should be
Nike or Jordan. She then
called her son to ask him,
Situation #3
Visualize yourself as a seller of bubble
tea in a food court. In the same food
court, two other bubble tea stalls are
offering the same product as yours.
Everyone is aware that it costs 85
pesos.
Once you have increased the price, the
consumers may tend to buy other
Perfect Competition
Is a type of market structure
where many products are similar
and may substitute each other
since they have the same features,
price, and quality.
There are many sellers and
consumers in this type of market
Examples of Perfect
Competition
Features of Perfect Competition
1. There are no barriers to entry in
or exit out of the market.
2. Firms produce homogeneous,
identical, units of output that are
not branded and same with labor.
3. No single firm can influence the
market price, or market
Check your understanding
Direction: State if the
given situation is a
PERFECT COMPETITION
or NOT.
Case # 1
You walked around the
whole mall and you found
out that there were 10
photo booth stalls. You
also noticed that they all
Case # 2
Jane is the only seller
of graham balls in their
school that’s why she
increased its price.
Situation #4
Imagine yourself starting to build an
automobile business. Since you are just a
beginner, you will set your price lower than
your competitors to attract more customers.
Once you already have more customers
compared to other companies, they would be
forced to lower their prices for them to gain
more clients and sales.
This situation shows an Oligopoly Market
Oligopoly
Is a type of market structure where
firms dominate the market by
supplying either similar or
differentiated products.
There are only a few companies in
this structure and they have control
over price implying this market since
Examples of Oligopoly
Features of Oligopoly
1. A relatively small number of
firms in the industry that
dominate the market.
2. Differentiated products.
3. Oligopolies set price than take
price.
Check your understanding
Direction: State if the
given situation is a
OLIGOPOLY or NOT.
Group Example #
1
1. Poultry Shop
2. Sari-sari Store
3. Milk Tea Shop
4. Grocery
Group Example # 2
1. Automobile industry
2. Steel industry
3. Manufacturing
industry
4. Oil companies
Thank you!