Competitive And Concentrated Markets
Overview
Walk down a street with eleven food stalls and you will find eleven prices within a few cents of each other. Walk into a country where one company supplies all the electricity and there is one price, take it or leave it. The good being sold is not what makes the difference. The number of sellers is.
This lesson is about market structure: how many producers there are, how different their products are, and how easy it is for a new firm to walk in. You will learn what happens to price, choice, quality and profit as a market moves from many sellers to very few, why a monopolist can do things a market trader cannot, and what an oligopoly is. Then you will apply demand and supply to a market you have not yet analysed with them: the market for labour, where the price is a wage, and where the same tools explain why a surgeon earns many times what a shelf-stacker does.
Objectives
- Identifying market structures
- Competitive markets
- The main characteristics of a competitive market
- The impact of competitive markets on price and choice
- The economic impact of competition on producers and consumers
- Non-competitive markets
- The main characteristics of a non-competitive market
- The impact of non-competitive markets on price and choice
- Monopoly and oligopoly
- The labour market
- The role and operation of the labour market
- Determination of wages through supply and demand
Mind map
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Lesson Note
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Lesson Evaluation
Congratulations on completing the lesson on Competitive And Concentrated Markets. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.
You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.
Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.
- In which occupations will wages tend to be highest? In those where: A. workers are in excess demand B. workers are paid weekly C. workers need little training D. workers require few qualifications Answer: A
- Which of the following is a characteristic of a competitive market? A. A single producer sets the price B. Barriers to entry are high C. Many firms sell similar products and none can influence the price D. Products are heavily differentiated by patents Answer: C
- A market is dominated by four large firms that watch each other's prices closely. What is this market structure called? A. A competitive market B. A factor market C. A monopoly D. An oligopoly Answer: D
- Total sales in a market are $400 million and the largest firm sells $140 million. What is its market share? A. 2.9% B. 26.0% C. 35.0% D. 65.0% Answer: C
- Which of the following would be most likely to raise the equilibrium wage of nurses? A. A fall in the demand for health care B. A large increase in the number of qualified nurses C. A reduction in the training required to qualify D. An increase in government spending on hospitals Answer: D
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