Transcript Day 59 - lawrencebrinson

Competition & Government
Word bank: increase, decrease, right, left, substitute, complementary,
subsidies
1. Apple computers and Gateway computers are considered
______________ goods.
2. A dog and dog food are considered ________________ goods.
3. When supply or demand increases, the line shifts to the
_______________.
4. When supply or demand decreases, the line shifts to the ____________.
5. If consumers get more disposable income then demand will
________________.
6. Which branch makes the laws?
a. Legislative
b. Executive
c. Judicial
d. Police
7. Which branch interprets the laws?
a. Legislative
b. Executive
c. Judicial
d. Police
8. Which branch enforces the laws?
a. Legislative
b. Executive
c. Judicial
d. Police
9. Which amendment was Prohibition and which repealed it?
a. 19, 21
b. 21, 18
c. 18, 21
d. 13, 22
10. A government ruled by ONE person would be what?
a. Democracy b. Theocracy
c. Monarchy
d. Oligarchy
11. A government rules by a FEW people would be what?
a. Democracy b. Theocracy
c. Monarchy
d. Oligarchy
WARM-UP
• In your own words, what is a market?
• What happens in a market?
MARKET
The interaction between supply and
demand to determine the market price
and quantity bought and sold.
– EXAMPLES:
• Cable Market, Soft Drink Market, Fast Food
Market, Cell Phone Market
3 Types of Market Structures
•Perfect Competition
•Monopoly
•Oligopoly
QUESTIONS WE WILL ASK
ABOUT THESE MARKETS
1. What are some examples?
2. How many firms are in this market?
3. Who or what sets the price in this
market?
4. How easy is it to get in this market?
5. How alike or different are the
available products?
Perfect Competition
• Examples:
– Apple Farmers, Corn Farmers
• Number:
– Many small firms
• Amount of price control:
– HIGH Competition
– NO Price control, prices set by supply & demand
Perfect Competition (cont.)
• Barriers (how easy is it to get in the
market?):
– Easy Entry, Easy Exit
• Nature of Product (How alike or different
the available products are) :
– Homogenous (goods are the same, all
can be substituted for one another)
• EX: Red Delicious Apple
Monopoly: One company provides
the product
• Examples:
– Standard Oil of late 1800s
• Number:
– 1 Large Firm
• Amount of price control:
– NO Competition / The
monopoly sets the price
Monopoly
Oligopoly
• Examples:
– Cell phones, airlines, cereals, soft drinks
• Number:
– A FEW large firms
• Amount of price control:
– SOME Competition / SOME price
control b/c the few large firms keep prices
pretty close.
Oligopoly (cont.)
• Barriers:
– Difficult Entry and Exit
• Nature of Product:
– Differentiated (similar products but not
exactly the same can be substituted)
• EX: Coke or Pepsi
• Whopper or Big Mac
MERGERS
• Merger: is when two firms join together.
• Horizontal Merger: 2 firms w/ similar
product lines combine
– EX: Nike and Reebok combine.
• Vertical Merger: 2 firms working at
different stages of production of a good
combine.
– EX: Ford buys a tire company
Mr. Egan’s Picture of Horizontal
and Vertical Mergers
ONE FINAL THOUGHT
QUESTION:
If someone is mad about how much
money they are making at a specific job
or how many hours they are working,
what can they do?
Labor Unions
• Union: organization that represents the
interests of workers. (12% of workers)
– Unions engage in collective bargaining,
using mediation and arbitration to make
conditions better for workers
– Closed shop: you have to be in the union to
be employed. Ford and General Motors
have these.
– Right-to-work states: states where the closed
shop is illegal.
Right to Work States
• What region of the country has the most right to work
states?
• What part of the country has the least?
• What does a right to work state forbid?
• What region of the country are unions the strongest?
Competition Spectrum:
1. When a company has a monopoly on a product what is the
effect on price?
2. What choices do consumers have in a monopoly?
3. Do you think monopolies should be allowed? Why or why
not?
4. What do mergers do for companies?
5. Perfect competition is impossible in America’s mixed
economy, if it were possible there would be NO government
regulation. How are prices determined in perfect
competition?
6. Who determines prices in the oligopoly?
BONUS: Why is competition a good thing for a market?