Market Structures and Price-Output Determination.pptx

The Market Structures and Price-output

1. Market Structures and Price-Output Determination ORFIANO, JHON PHAUL IOEL P.

2. MARKET STRUCTURES

3. PURE COMPETITION A market with many sellers offering identical products, where no single firm can influence the price.

4. AGRICULTURAL MARKETS Selling identical crops (corn, eggplant, rice, etc.) STOCK MARKETS Buy and Sell of companies ( sm , Robinsons, ayala etc ) FOREIGN EXCHANGE MARKET People exchange money (peso to dollars, yen to euros) ONLINE MARKETPLACE Each sellers sells the same products in different online platforms ( shoppee , temu , tiktok , ebay etc.)

5. MONOPOLY A market dominated by a single seller with no close substitutes.

6. UNIQUE PRODUCT UNIQUE PRODUCT UNIQUE PRODUCT UNIQUE PRODUCT

7. MONOPOLISTIC COMPETITION A market with many sellers offering similar but differentiated products.

8. OLIGOPOLY A market dominated by a few large firms, often interdependent in pricing and output decisions.

9. AIRLINES Few major airlines control large portion of air travel MOBILE PHONE PROVIDERS Small number of companies per country AUTOMOBILE INDUSTRY Few manufaturers a portion of global car market TECHNOLOGY INDUSTRY Apple Samsung Google & Microsoft hold dominant positions in various technology sectors

10. MARKET STRUCTURES

11. DETERMINANTS OF MARKET STRUCTURE

12. NUMBER OF SELLERS The more sellers there are, the stronger the competition.

13. NATURE OF PRODUCT Products can be either identical (homogeneous) or unique (differentiated).

14. BARRIERS TO ENTRY Some industries require licenses, capital, or special technology to enter.

15. CONTROL OVER PRICE Sellers in competitive markets are price takers; in monopolies or oligopolies, they are price makers.

16. GOVERNMENT REGULATION Laws and policies can limit or encourage competition.

17. ECONOMIES OF SCALE Big companies can produce more at lower costs, gaining competitive advantage.

18. PRICE AND OUTPUT DETERMINATION

19. PURE COMPETITION Prices are dictated by overall market supply and demand. Firms produce where Marginal Revenue equals Marginal Cost (MR = MC). In the long run, only normal profits are earned due to free entry and exit. Example: A tomato farmer adjusts output to match prevailing market prices. “Bida ang Palengke ”

20. MONOPOLY The firm sets prices based on consumer demand—it is the sole seller. Output is produced at MR = MC, but prices exceed marginal cost. Can earn sustained supernormal profits due to barriers to entry. Example: Meralco adjusts electricity prices based on demand and cost factors. “Hari ng Merkado ”

21. MONOPOLISTIC Firms have pricing power because of product differentiation. Output is decided where MR = MC, considering branding and loyalty. Long-run profits normalize as new firms enter the market. Example: A milk tea shop prices creatively based on its unique appeal. “Milk tea Wars!”

22. OLIGOPOLY Prices may remain rigid due to mutual dependence among few firms. Output decisions are strategic, using models like Cournot or kinked demand. Firms may maintain profits through collusion or strong differentiation. Example: Globe and PLDT avoid price wars by offering differentiated services. “ Nagbabantayan ang mga higante .”

23. Comparison Table Market Type Price Control Output Rule Long-Term Profit Perfect Competition None (market sets) MR = MC Normal profit Monopoly Full control MR = MC Supernormal profit Monopolistic Competition Some control MR = MC Normal profit Oligopoly Strategic control Depends on model Sustained profit