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COMPETITIVE MARKETSDEMAND &
SUPPLY
IB Economics
created for:
Jason Welker
building on the work of:
The Market
market
The Nature of Markets
a place where buyers and sellers come together and exchange goods & services
market
The Nature of Markets
like the butcher, the grocery store, or the internet
market
The Nature of Markets
they can be local, national, and also international
market
The Nature of Markets
they can be local, national, and also international
market
Can you give an example of each type of market?
The Nature of Markets
they fall into two categories:product markets or
resource market
market
The Nature of Markets
product market
The Nature of Markets
is the purchase of consumer goods & services directly from
the producers
product market
The Nature of Markets
product marketlike a computer from
The Nature of Markets
product marketor an
The Nature of Markets
product marketfrom a farmer
The Nature of Markets
resource market
The Nature of Markets
is the purchase of the factors of production: land, labor, capital,
and entrepreneurship by businesses of individuals and
families
resource market
The Nature of Markets
resource marketlike trees from a family owning a forest
The Nature of Markets
Competitive Markets
is one with a large numbers of buyers and sellers, limiting the
power of a single firm
competitive markets
The Nature of Markets
they bring about diversity of goods, efficiencies, and a
general greater wealth
competitive markets
The Nature of Markets
markets are “free” when they can openly attempt to win business away from others
competitive markets
The Nature of Markets
Market Structures
4 types of market structure:
market structures
The Nature of Markets
4 types of market structure:monopoly | oligopoly
monopolistic competition perfect competition
market structures
The Nature of Markets
4 types of market structure:monopoly | oligopoly
monopolistic competition perfect competition
market structures
The Nature of Markets
4 types of market structure:monopoly | oligopoly
monopolistic competition perfect competition
market structures
The Nature of Markets
4 types of market structure:monopoly | oligopoly
monopolistic competition perfect competition
market structures
The Nature of Markets
4 criteria are used to categorize# of firms | firm’s level of
power | product differentiation between firms | ease of entry
and exit
market structures
The Nature of Markets
4 criteria are used to categorize# of firms | firm’s level of
power | product differentiation between firms | ease of entry
and exit
market structures
The Nature of Markets
4 criteria are used to categorize# of firms | firm’s level of
power | product differentiation between firms | ease of entry
and exit
market structures
The Nature of Markets
4 criteria are used to categorize# of firms | firm’s level of
power | product differentiation between firms | ease of entry
and exit
market structures
The Nature of Markets
perfect competition
The Nature of Markets
very few firms
perfect competition
The Nature of Markets
very few firmsfirms don’t influence supply
perfect competition
The Nature of Markets
very few firmsfirms don’t influence supply
firms make identical products
perfect competition
The Nature of Markets
very few firmsfirms don’t influence supply
firms make identical productsentry & exit easy
perfect competition
The Nature of Markets
is quite theoretical, though commodities markets (such as
corn, wheat, etc.) do come close
perfect competition
The Nature of Markets
monopolistic competition
The Nature of Markets
many firms
monopolistic competition
The Nature of Markets
many firmsfirm’s decisions barely effect
market
monopolistic competition
The Nature of Markets
many firmsfirm’s decisions barely effect
marketrelatively different
goods
monopolistic competition
The Nature of Markets
relatively low barriers to entry
monopolistic competition
The Nature of Markets
monopolistic competition
The Nature of Markets
Can you give an example of a type of company that would fit this description?
oligopoly
The Nature of Markets
few dominant firms
oligopoly
The Nature of Markets
few dominant firmssignificant control over price
oligopoly
The Nature of Markets
few dominant firmssignificant control over pricesame or different products
oligopoly
The Nature of Markets
few dominant firmssignificant control over pricesame or different products
barrier to entry high
oligopoly
The Nature of Markets
few dominant firmssignificant control over pricesame or different products
barrier to entry high
oligopoly
The Nature of Markets
oligopoly
The Nature of Markets
What real-world firms represent an oligopoly?
monopoly
The Nature of Markets
only one firm
monopoly
The Nature of Markets
only one firmfirm sells to whole market
monopoly
The Nature of Markets
only one firmfirm sells to whole market
no substitute products exist
monopoly
The Nature of Markets
only one firmfirm sells to whole market
no substitute products existhigh barrier to entry
monopoly
The Nature of Markets
market structure & power
The Nature of Markets
most market power
least market power
perfect competition
monopolistic competition
oligopoly competition
monopoly
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