ACTIVITY 1

Directions: Complete the table

The picture attach below are the market structure based your answer there.

Causes of the Possible solution to Problem solve the problem Economic Problems Entry Number Product Imposition and Exit Market Structure of Example in the Sellers Differences of Prices Industry 1. Pure Competition 2. Monopolistic Competition 3. Monopoly HOGGI 4. Oligopoly 5. DuopolyLESSON 6: Basic Economic Problems The economic problem exists because, although the needs and wants of people are endless, the resources available to satisfy needs and wants are limited. Scarcity - Implies there is only limited quantityr of resources. - Refers to the basic economic problem, the gap between limited - that is, scarce resources and theoretically limitless wants. - This situation requires people to make decisions about how to allocate resources efficiently, in order to satisfy basic needs and as many additional wants as possible. - It is the foundation of the essential problem of economics. Limited Resources 1. Limited in physicui quantity, as in the case of the land, which has a nite quantity. 2. Limited in use, as in the case of labour and machinery, which can only be used for one purpose at any one time. Semuelson's Three Questions 1. What to produce? - Societies need to choose the best mix of merchandise and ventures to meet their uctuated needs and wants. They should choose what amounts of various assets ought to be assigned to these merchandise and ventures. 2. How to produce? -5ocia| orders likewise need to choose the best blend of variables to make the ideal yield of products and enterprises. For instance, what amount land, work, and capital ought to be utilized to deliver customer products, for example, PCs and engine vehicles? 3. For whom to produce? - Finally, all social orders need to conclude who will prot by the output from its nancial movement , and the amount they will get. This is regularly called the issue of allocation. Paul Samuelson - America's rst Nobel Prize winner for economics. - Often credited with providing the rst clear and simple explanation of economic problem. Environmental Issues Monopoly Inequality - Economics is customarily worried about utility amplification permitting people to target expanding their monetary government assistance. Be that as it may, this can disregard long haul contemplations of natural supportability. In the event that we have overutilization in this century, it could cause major issues for people in the future for example an Earth-wide temperature boost, loss of non-inexhaustible assets. The trouble is that the value component doesn't consider these future expenses, and arrangements to lessen utilization may demonstrate politically disagreeable. How to manage expected future natural expenses? -It It was a monetary issue that Adam Smith was worried about in his compelling book of financial aspects "A Wealth of Nations." For different reasons firms can pick up syndication influence and along these lines the capacity to set significant expenses to purchasers. Given an absence of choices, restraining infrastructures can make high benefits to the detriment of customers, causing imbalance inside society. How to manage the issue of imposing business model? A legislature may look to support rivalry, for example rail diversifying, or value guideline to forestall unreasonable costs. It is viewed as an issue as a result of regularizing conclusions, for example, it is an unjustiable dispersion of assets. Additionally, you could contend there is a reducing peripheral utility of riches. 0n the off chance that all riches is possessed by a little level of the populace, this diminishes net government assistance. Redistributing the cash to the extremely poor would empower a more prominent net utility to society. Unemployment Recession Ination - It has been a significant economic issue in cutting edge economies. One of the chief reasons forjoblessness is swings in the business cycle. A fall sought after for products during a downturn, makes individuals be laid off. Due to the discouraged condition of the economy, there is an irregularity among request and flexibly of laborers. -It It is a time of negative financial development - a decrease in the size of the economy. It compounds issues of imbalance and joblessness. An issue of downturn is that it can make a negative winding. At the point when request falls, firms lay off laborers. The jobless have less cash to spend bringing about additional falls popular. -lnflation can be a major issue if costs rise quicker than wages and ostensible loan fees. In times of quickly rising costs, individuals with reserve funds will see a decrease in their genuine riches. 0n the off chance that costs rise quicker than compensation, at that point individuals' spending force will decay. Additionally, quickly rising costs makes disarray and vulnerability and can make firms cut back on venture and spending. LESSON 5: Market Structures In this lesson you are going to study the different market structures and their characteristics. Also you will be able to understand the importance of market structures in consumers, sellers, business, government and especially in our economy. Market It is place where two parties can gather to facilitate the exchange of goods and services. It involves buyers and sellers It may be represented by physical locations where transactions are made. Its size may be determined by the number of buyers and sellers, as well as the amount of money that changes hands each year. Types of Market 1. Black Market refers to an illegal market where transactions occur without the knowledge of government or other regulatory agencies. 2. Auction Market - It brings many people together for the sale and purchase of specific lots of goods. The buyer or bidder tries to top each other for the purchase price. 3. Financial Market refers to any place where currencies, securities and bonds are traded between to parties. These markets are the basis of capitalist societies. and they provide capital information and liquidity for businesses. Aspects in Classifying Market Structures 1. 2. 3. Degree of competition Is it driven by the number of competing firms in the industry. The higher the number of rms, the greater the degree of competition. Number of rms Pertains to the actual number of competitors in the market. Bargaining power of consumers It refers to the ability of consumers to inuence market prices. A high bargaining power means that consumers are price makers. 0n the contrary, a low or no bargaining power implies that suppliers are price makers and that consumers are price takers. 4. Barrier to entry It alludes to the straightforwardness with which new rms can infiltrate the business. A high obstruction to section is described by high arrangement costs that expect participants to have a tremendous measure of beginning venture. Model is on account of ease items that must be created and sold in high volume so as to recuperate the venture. This idea is called economies of scale. For instance, another innovation that is ensured by copyright laws debilitates the contenders from setting up business. Different Market Structures 1 . Perfect Competition It is charecterized by many firms selling homogenous or identical goods and have many buyers who have access to the good. It is very easy for new sellers to enter the market and put up business. There are no or minimal barriers to entry, thus, it is very easy for sellers to enter the competition. Consumers have high bargaining power, that is, consumers influence the price and sellers are considered to be price takers. Examples would be stall in the public market that sell staple goods like bread, fruits and vegetables. 2. Monopolistic Competition 3. Oligopoly It is closer to what occurs in reality. It features many sellers but the sellers typically have less capability and are smaller in size. There is low barrier to entry, which means sellers come and go. Goods are slightly differentiated in a monopolistic competition. Due to product differentiation, monopolistic firms can dictate the price and consumers have only moderate bargaining power. Example is tha a salon, it may differentiate its services by creating a certain ambiance in its shop or by having experts and well trained stylists to justify their higher rates. It is characterized by having few players in the industry. - Firms dominate the market in ten-11s in market share. - Consumers having limited choices, oligopolistic rms are price makers or they dictate the price of the good. - Consumers have no bargaining power. - There is a high barrier to entry because of expensive infrastructure prevalent in such industries. - Example is a telecommunications industry. Here in the Philippines there are only three companies that provide telecom services. 4. Monopoly - Market structure that has a single player that controls the market. - It has no competition, making it the least competitive of the four stuctures. - Sole provider of a good or service in the market means that the rm is the price maker and consumers have no bargaining power. - Barriers to entry are extremely high. - Example is that electric cooperatives. 5. Duopoly - It is a situation where two companies together own all, or nearly all, of the market for given product or service - It is the most basic form of oligopoly. a markey dominated by a small number of companies. - The companies in a duopoly tend to compete against one another, reducing the chance of monopolistic market power. - Visa and Mastercard are examples of duopoly that dominates the payments industry in Europe and United States. Importance of Market Structure - Have a great importance when studying economics because it tells us how the market will behace, depending on the of buyers and sellers, its dimensions the existence of entry and exit barriers etc. will determine how an equilibriumis reached. - It enable us to understand the characteristics of a market that influence the behaviour and results of the firms workingin that market. Key Concepts ' Market - It is place where two parties can gather to facilitate the exchange of goods and services. Degree of competition Is it driven by the number of competing rms in the industry Number of firms It pertains to the actual number of competitors in the market. Bargaining power of consumers It refers to the ability of consumers to influence market prices Barrier to entry It refers to the ease with which new firms can penetrate the industry PerfectCompetitlon - It is charecterized by many firms selling homogenous or identical goods and have many buyers who have access to the good. Monopolistlc Competition - It features many sellers but the sellers typically have less capability and are smaller in size. Ollgopoly - It is characterized by having few players in the industry. Monopoly - Market structure that has a single player that controls the market. Duopoly - It is a siyuatuin where two campanies together own all, or nearly all, of the market for given product or service