Thursday, February 10, 2011

Honors Business Economics: 11 February 2011

Beyond the Sound Bites (if time after the Test):

Skip #16 and #35; do not answer on the Test.

The Chapter 4 Test Make-up is today.


The Ch. 4 Sec. 3 Quiz Make-up is today.

EPA chief Lisa Jackson appearing before the House Energy and Commerce Committee and John Shimkus (IL-R).


What will happen to the cost of electricity? And, who will pay the price?

Standard feature:

The electronic edition of the Philadelphia Inquirer is available. We have the Sunday edition, available on Mondays, in addition to the Tuesday through Friday editions on the other days.

Please follow the steps below:

Click on the words "Access e-Inquirer" located on the gray toolbar underneath the green locker on the opening page.
Password: 10888

Chapter 7


Chapter 7: Market Structures


Section 1: Competition and Market Structures

Market structure is the nature and degree of competition among firms doing business in the same industry. Competitive markets represent an ideal situation not always found in the economy. The idea of perfect competition is based on large numbers of buyers and sellers, identical products, independent action by market participants, reasonably good information about market conditions, and the freedom to enter or leave the market. Imperfect competition occurs when any of the conditions for perfect competition are not met. There are three forms of imperfect competition: monopolistic competition, which has all the characteristics of perfect competition except for product differentiation; oligopoly, which is a market structure dominated by a few very large firms; and monopoly, which is a single producer with the most control over supply and price. All profit-maximizing firms, regardless of their market structure, maximize profits by equating the marginal cost of production with the marginal revenue from sales.

Student Web Activity

"Department of Justice - Antitrust Enforcement"

Today, government has the power to encourage competition and to regulate certain monopolies that exist for the public welfare. In some cases, government has taken over certain economic activities and runs them as government-owned monopolies. The United States Department of Justice Antitrust Division works to promote and protect fair business practices through the enforcement of antitrust laws. In this activity, you will learn more about the Antitrust Division.


Why It Matters

The Big Ideas

Guide to Reading

Section Preview

Content Vocabulary


Which Government is the Most Laissez-Faire? 2:56

Peter Schwartz, former chairman of the board of directors of the Ayn Rand Institute, is asked if any government, past or present, comes close to his idea of laissez-faire capitalism.

In-class assignment, with a partner, answer the following questions.

Is there any government, past or present, that comes close to the idea of laissez-faire capitalism?
What nation was founded on individual rights?
In spirit, does the U.S. retain these ideas?
Will a nation founded on individual rights happen anywhere else?

market structure

Market Structures, 5:52

In-class assignment, with a partner, answer the following questions.

What will differ based on the market structure?
What is the continuum of Market Structures? (begin to draw the continuuum from left to right)
How do I recognize a perfectly competitive market?
How do you define market power?
What would happen if you tried to raise your price?
What characterizes a monopoly?
What are barriers to entry?
Are there other structures?
What are two more structures?
What characterizes Monopolistic Competition?
What characterizes Oligopoly?
What is mutual interdependence?
What product or products fit each?

perfect competition

Perfect Competition, 7:13

In-class assignment, with a partner, answer the following questions.

How would you recognize a perfectly competitive industry?
Do they have power to control price?
If the individual firm can not set the price, then where does the price come from?
What happens if they lower their price?
Is there anything you do have control over?
What is the formula for maximizing profit?
What about marginal costs?
Why are profits in the short run?
What is the effect of sharks entering the competition?
In the long run, how much does a perfectly competitive firm's profits equal?

imperfect competition

Animated diagram showing market failure due to imperfect competition, :30

monopolistic competition

product differentiation

nonprice competition




price fixing, 1:02

Price fixing defined and illustrated here by these three individuals.

(Conversation and Discussion: Business Readings, Duisburg-Essen University, winter term 2008-09)



natural monopoly

economies of scale

geographic monopoly

technological monopoly

government monopoly

Academic Vocabulary

Ch. 7 Sec. 1 Reading Strategy

In-class assignment, with a partner, complete the graphic organizer by identifying the characteristics of different market structures.

Issues in the News

Profits, Prices Spur Oil Outrage

Perfect Competition

Necessary Condition

Profit Maximization

Figure 7.1 Perfect Competition and Profit Maximization, p. 171


A Theoretical Situation

Imperfect Competition

Reading Check


Why does perfect competition serve as a theoretical market structure?


Market Researcher

Monopolistic Competition

Product Differentiation

Nonprice Competition

Profit Maximization

Reading Check


How is profit maximization in a monopolistic firm different from that of a perfect competitor?

The Global Economy and You

Poco, Heart, and Wisdom


Interdependent Behavior

Profit Maximization

Reading Check


Why do oligopolists frequently appear to act together?


Types of Monopolies

Profit Maximization

Reading Check


Why do natural monopolies sometimes result in economies of scale?

Profiles in Economics

Bill Gates

In-class assignment, with a partner, summarize Perfect Competition and Profit Maximization based on the example.

Ch. 7 Sec. 1 Review

In-class assignment, with a partner, use the graphic organizer to identify the characteristics of imperfect competition.


Ch. 7 Sec. 2 Reading Strategy

In-class assignment, with a partner, complete the graphic organizer about why maintaining adequate competition is a worthwhile goal. Use the graphic organizer to list some of the effects of competition.

Ch. 7 Sec. 2 Review

In-class assignment, with a partner, use the graphic organizer to identify and describe both types of externalities.

Ch. 7 Sec. 3 Reading Strategy

In-class assignment, with a partner, complete the graphic organizer by describing how governments try to avoid market failures.

Ch. 7 Sec. 3 Review

In-class assignment, with a partner, use the graphic organizer to identify how the federal government can maintain competition and improve economic efficiency.


Ch. 4 Prep


Multiple Choice Quiz


Crossword Puzzle




Ch. 5 Prep

Chapter 5 Supply Multiple Choice Quiz


Chapter 5 Puzzle


Chapter 5 Supply Flashcards


Ch. 6 Prep

Chapter 6: Prices and Decision Making
Multiple Choice Quiz


ePuzzle Concentration


Academic, Glossary, People/Places/Events


Email (or hand in hard copy) to

The Ch. 4 Sec. 3 Quiz Make-up is available to take.



Email (or hand in hard copy) to

Friday HW
1. p. 164, #7