Describe what is happening

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Take out SpiralWhat will we learn today?What will we learn today?12.2.7 Analyze how domestic and international competition in a market economy affect goods and services produced and the quality, quantity, and price of those products.

Unit: Market StructuresUnit: Market Structures

Think about the last purchases you made, what contributed for you deciding to buy that item? Is there truth to advertisement?

Assignment 12: 7.3 Monopolistic Competition and Oligopoly Notes

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Section 3: Monopolistic Competition and OligopolySo far we learned about two extremes: perfect competition and monopoly. Very few things actually fall into those categories. Instead, most fall into two additional categories economists call monopolistic competition and oligopoly.

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I. Monopolistic CompetitionIn monopolistic competition, many

companies compete in a open market to sell products that are similar but not identical.Examples: jeans, bread (loaf), shoes, drinks, etc.

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A. Four Conditions of Monopolistic Competition1. Many firms: many companies selling

products2. Few barriers to entry: anyone can sell

products without much trouble getting started3. Slight control over price: consumers are

willing to pay more for some brands, but not too much more.

4. Differentiated products: even though products are similar, they have differences (Zune vs. iPod)(differentiation: making a product different from other similar products)

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B. Nonprice CompetitionFirms try to compete with nonprice competition, or attracting customers through style, service, or location, but not a lower price.

Some examples:1. Physical Characteristics: size, color,

shape, texture, tasteExample: A pen is a stick with ink that writes, but we pay more for style or how it writes.

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2. Location: Location is very important to a business's success.

3. Service level: restaurants: expensive, fast food: cheap. Both offer food.

4. Advertising, image, or status: Customers are willing to pay more for brand name clothes with logos

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Section 3 - Oligopoly$ An oligopoly is a market

dominated by two or four firms producing 70%-80% of the output. Example: Pepsi, Coke

A. Barriers to EntryIt can be tough to go up

against these companies. Who would want to create a new soft drink to challenge Pepsi or Coke?

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B. Cooperation and CollusionPrice war: a series of competitive price cuts

that lower the market price below the cost of production example: PS3 lowers price, so does Xbox and Nintendo

Collusion: when businesses get together and set prices, divide the market, or limit production (illegal)

Price fixing: an agreement among firms to charge one price for the same good (illegal)

Cartel: a formal organization of producers that agree to coordinate prices and production (illegal in the US)

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It’s a Mad Mad Mad World

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Assignment :pg. 171, 1 – 7 (skip #6)

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Assignment : Advertising BrainwashingWrite down as many advertising slogans as

you can think of.

Person who can write the most gets extra credit.

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ADVERTISING: What is it?Like A Rock

ADVERTISINGLike A Rock

ADVERTISINGMaybe She’s Born With It

ADVERTISINGMaybe She’s Born With It

ADVERTISINGI’m Loving it!

ADVERTISINGI’m Loving it!

ADVERTISINGJust Do It!

ADVERTISINGJust Do It!

ADVERTISINGCan You Hear Me Now? Good!

ADVERTISINGCan You Hear Me Now? Good!

ADVERTISINGCh Ch Ch Charming!

ADVERTISINGCh Ch Ch Charming!

ADVERTISINGIf It Doesn’t Get All Over the Place, It Doesn’t

Belong In Your Face

ADVERTISINGIf It Doesn’t Get All Over the Place, It Doesn’t

Belong In Your Face

ADVERTISINGHave It Your Way!

ADVERTISINGHave It Your Way!

ADVERTISINGEat Fresh

ADVERTISINGEat Fresh

ADVERTISINGIs It in You?

ADVERTISINGIs It in You?

ADVERTISINGThink Outside the Bun

ADVERTISINGThink Outside the Bun

ADVERTISINGBuilt _____ Tough

ADVERTISINGBuilt Ford Tough

The Power of AdsYOUR TURN! You will get into groups of 2-3 (pick

people you are comfortable working with, possibly after school)

In groups, you will choose a product to sell. You will apply non price competition to encourage people to buy your product.

For this product you must create:1. A slogan- short catchy saying 2. A advertisement- (hand drawn or computer

generated) poster with slogan and picture that includes advertising technique, message and target audience.

3. A commercial- short skit that includes advertising technique, message and target audience.

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- All group members must participate in commercial.- You must use props and scripts.- Commercial will be performed in front of class. (You can record on your own, but must be in a format that can be shown to class.)

This project is worth 50 points,so be sure to do a good job.

ADVERTISMENT ProjectAdvertisement/Poster – 15 points

Leave little to no white spaceShould be very visually appealing (think like a magazine

advertisement)Use your slogan!

Commercial/Skit – 25 pointsEveryone participates (camera man can sit it out)Can be anywhere from 45 seconds to 2:00 longUse props. Dress up. Be professional. Use a script.

Don’t improvise.Slogan – 10 points

Short, catchy.

Is Wal-Mart Good for America?Discuss

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Is Wal-Mart Good For America?

Before we watch: Outsourcing is when a business obtains services or products used in

manufacturing, such as parts for a television set, from an outside (often overseas) supplier or manufacturer in order to cut costs.

Offshore Companies conduct most of their business outside of the country in which they are incorporated. These companies are also known as non-resident companies.

Push Production is when manufacturers of products decide what to produce, how much to produce and the price of the product.

Pull Production is when retailers determine what the manufacturer will produce, how much to produce and the price of the product.

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What did you notice at the Wal-Mart shareholders meeting? Do you think this is different from other shareholders' meetings? If yes, in what ways?

How is Wal-Mart able to keep track of its inventory? Why is this important? List the effects this has on producers.

Trace the decline of Rubbermaid from 1994 to 2004. What factors most contributed to this decline?

What is an opening price point? How does it influence sales?

Wal-Mart started a campaign encouraging people to buy products that were made in America. What influence did this have on Wal-Mart's buying practices? Be specific!

In 1994, President Clinton said that new trade agreements would create a market for American products in China. What happened to the United States companies after opening trade with China? Include statistics, companies and places.

List the arguments in favor of outsourcing and those that are against it.

Compare the situation at Five Rivers Electronics and the Thomson Plant. What caused problems and what was the result for each?

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