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Econ. January 7

Published on Dec 01, 2015

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PRESENTATION OUTLINE

1.

Firms, competition, market

Mr. Melkonian
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2.

Things to do before mid-term

  • Major Assignment
  • Finish chapter - Quiz
  • Finish next chapter - no quiz
  • Review / mid-term evaluation expectations
3.

Did someone say quiz???

Quiz Thursday, January 15, 2015 :D
4.

profit motivates all firms

However... The purpose of economic activity is for consumer satisfaction
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5.

market

Remember from earlier... group of buyers and sellers of particular goods.
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6.

pancake market

Involves everyone who sells and buys pancakes
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7.

rely on competition to create choice

The main way firms remain accountable to decisions
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8.

lots of ways firms compete

Price is the obvious one... Cheaper will increase sales of most things
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9.

non-price competition

Change anything... But price
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10.

but not all markets are the same...

Sometimes we have very little choice/alternatives
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11.

determine market structure

big company like Walmart or a privately owned grocery store in Keswick?
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12.

Factors to determine market structure

  • Number/size of firms in the market
  • Degree of product similarity 
  • Firm's control over price
  • Ease of other firms entering/leaving market
  • Amount of non-price competition
13.

4 different types

Spectrum - Perfect competition and Monopoly on either end
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14.

Perfect competition

Many producers, uniform product, aggricultre 
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15.

Distinguishing factors

  • lots of buyers/sellers - no control over market supply
  • everyone sells a standardized product
  • producers have to accept market equilibrium price. No price change
  • easy to enter/exit market. No wild start-up costs
  • little non-price competition. Everything is the same
16.

how do you succeed then??

Manage costs effectively 
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17.

the more efficient you are

The more profitable you will be here
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18.

but if you're making lots of money

people want in ... more supply, market price falls
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19.

this type of market doesn't exist

always start-up costs and non-price competition
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20.

Wheat farmer - as close as it gets

Expensive start-up though
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21.

Monopolistic competition

Product is differentiated and there are lots of similar firms
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22.

characteristics

  • lots of firms compete in the market
  • firms sell similar but not identical product
  • some firms big enough to influence total supply / price
  • non-price competition is significant
23.

competition for burger joints?

quality, price/promotion, service, availability/location (24 hr?)
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24.

pretty easy to enter/exit

firms are usually small - but tough financial barriers 
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25.

product differentiation

how is mine different than yours?
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26.

7.2 sums this up nicely

27.

oligopoly

Operate as huge firms in their respective markets 
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28.

market structure

  • dominated by few large firms
  • competing firms may produce a range of products
  • firm has substantial influence on price
  • huge barriers to entry
  • non-price compettion is intense.
29.

consumers get cheesed

Oligopoly changes price pretty much when they feel like it
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30.

gasoline

All of it goes up/down at the same time - so people get suspicious 
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31.

not necessarily a conspiracy though...

they have the right to set the price to what they deem fit
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32.

collusion

firms set prices, limit output, eliminate competition
33.

monopoly

one firm has complete control of market
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34.

Market characteristics

  • market dominated by a single firm - total control over supply
  • unique product - no close subs
  • firm is price maker - will maximize profits
  • major barriers to entry
  • no competitors so there's no non-price competition
35.

can become a monopoly

if you patent something that gives you sole right to produce it
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36.

canadian radio-television and telecom commission (crtc)

hold monopoly over Canadian media
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37.

natural monopoly

things with very high fixed costs, more efficient as a monopoly
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38.

sometimes more than one supply is impractical/wasteful

do we need many electricity providers?
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39.

deregulation

opening market so there's more competition
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40.

PRIVATIZATION

one method of deregulating - sale of public assets to private firms
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41.

Untitled Slide

Peter Melkonian