Extending comprehension competency focus

 

Answering WHY questions: Speak up your mind.

1. Why does perfect competition benefit society?

2. Why does lack of competition lead ti higher prices?

3. Why is the market price the equilibrium price in a perfectly competitive market?

4. Why do products need to be almost identical in a perfectly competitive market?

5. Why is perfect competition such a rare market structure?

6. Why don’t many businesses rush into monopolistic market to get more profits if a monopoly is collecting all the profits?

7. Why is effective advertising important to succeed in the market structure of monopolistic competition?

8. Why do oligopolies have limited control over prices?

9. Why is monopolistic competition the most common form of market structure in the United States?

 

Critical thinking (Discussion competency): Discuss the following questions in groups/pairs.

     (1) Write down your opinion in note form;

(2) Prepare for discussion: revise the speech formulas.

 

1. What determines the price of goods and services in a perfectly competitive market?

2. Is there any way for a seller in a perfectly competitive market to raise prices?

3. How is the Internet important to maintaining a competitive market structure?

 

Comparing and Contrasting: Use a table like the one below to describe how much competition the seller faces and how much control over price he or she has in each

type of market structure listed.

 

	Competition	Control over price
Monopoly
Oligopoly
Monopolistic competition

 

Synthesizing information: complete the sentence below.

Perfect competition forces the price to equal the ____possible price the seller will accept and the____ the  buyer will pay.

 

Determining cause and effect: Supply the missing cause or effect in the spaces provided:

 

The Perfect Market Structure

1. Cause:______________________ ________________________________ ________________________________ 2. Cause:________________________ ________________________________ 3. Cause: Entrepreneurs are less likely to enter a market with high start-up costs. 4. Cause: Sometimes firms cannot make enough to stay in business. 5. Cause:________________________ ________________________________ ________________________________

1. Effect: The market determines price without influence from suppliers or customers. 2. Effect: Identical products are key to perfect competition. 3. Effect:_______________________ ______________________________ ______________________________  4.Effect: ______________________ _______________________________ 5. Effect: Prices are forced down to the point where they just cover the seller’s costs of doing business.

Explaining:

1. Try to explain how perfect competition tends to drive down profits.

2. Profits are determined by price. Explain how product differentiation is used to

   try to increase profits.

3. Explain how a local fast-food restaurant manager faces almost perfect

  competition in the demand for high-school employee labor.

Making inferences:

1. What is the motivation for producers to become as efficient as possible?

2. If there are already many similar products in a market, why would new businesses continue to enter it?

Exploring issues: Write a paragraph using the following as a topic sentence:

It is practically impossible to meet all the conditions for perfect competition.

Reviewing: Watch video “Imperfect Competition”. Have you learnt anything new about different forms of imperfect competition? Answer the following questions:

1. When does imperfect competition appear?

2. What new forms of imperfect competition does the video tell about?

What are their characteristics?

3. What examples of different forms of imperfect competition does the

video give?

 

Applying information: Use the information that follows and complete the exercises below.

 

Because of the need to build brand loyalty, competitive advertising is even more important in monopolistic competition than it is in oligopolies. Advertising attempts to persuade consumers that the product being advertised is different from, and superior to, any other. When successful, advertising enables companies to charge more for their products. That’s why companies like Nike, The Gap, and Procter & Gamble pour millions of dollars into their advertising budgets every year.

 

Ex.1. Give three examples of products you have bought recently based on advertising, not price. How does your consumer behavior justify product differentiation?

 

Ex.2. Develop an advertisement using yourself as a hardworking product. Use product differentiation to explain why a buyer should “purchase” you.

 

 

Enjoying comprehension competency focus: