ch. 7: a spectrum of markets gr. 11 economics (cie3m1) m. nicholson
TRANSCRIPT
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Ch. 7: A Spectrum of Markets
GR. 11 ECONOMICS (CIE3M1)M. Nicholson
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Perfect Competition
Many sellers of identical product Easy to enter the industry No control over price and no
advertising Examples – stock market,
agriculture
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Monopoly
One seller and no substitutes Very difficult or impossible to enter
the industry Price-maker much control over
price Advertise to improve image Examples water, urban transit,
cable
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Oligopoly
Homogeneous: some product distinction Differentiated: much product distinction Few sellers and difficult to enter Some control over price Much advertising for differentiated Automobiles, beer differentiated Steel, cement homogeneous
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Monopolistic Competition
Many sellers with some product distinction
Easy to enter the industry, but a little control over price
Lots of advertising Examples Fast food, clothing
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Concentration In Canadian Industry
Concentration ratio measures the proportion of industry’s sales by top 4 and top 8
Tobacco, oil and transportation equipment have little competition
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Restricting Competition
Unfair competition Establishing a cartel Interlocking directorates Mergers Establishing a holding company Horizontal, vertical, conglomerate
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Advantages Of Large-Scale Operations
Money available for research to develop new and better products and more efficient, cheaper production methods
Large quantity production allows for specialized machinery (capital) and labour (human) that increases efficiency and lowers cost (e.g. automobiles)
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Government Regulation
Government Ownership – natural monopolies
Laws to promote competition Regulation of prices and services