LEARNER’S ACTIVITY SHEET

APPLIED ECONOMICS

Name: ________________________________________________________ Grade Level: _________________

LEARNING COMPETENCY
Differentiate various market structures in terms of:
a. number of sellers; b. types of products; c. entry/exit to market; d. pricing power; and e. others
OVERVIEW
Subject Matter: Market Structures
In this lesson, the learners shall be able to determine the different marker structures and their characteristics. This will also
test their critical thinking ability as they answer all the activities given as they go deeper to the lesson.
Motivational Question:
Directions: Answer what is being asked. Write your answer on the space provided after the question.
1. How market structures affect the buyers?
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2. What do you think is the market structure in the Philippines?
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Pre-Assessment:
Directions: Give your own definition of the following words.
1. Market Structure- __________________________________________________________________________________
2. Pure Competition - _________________________________________________________________________________
3. Oligopoly - ________________________________________________________________________________________
4. Monopoly - _______________________________________________________________________________________
5. Monopolistic Competition- ___________________________________________________________________________

Market Structures
System for grouping and analyzing markets according to the degree and type of competition among sellers.
Industry
Group of firms producing similar products or using similar processes.
Market
Includes firms that produce similar products or use similar products, or use similar processes, and compete for the same
buyers.
Geogarphic Boundary of a Market
Defined by the geographic area in which sellers and buyers compete.
Product Boundary of a Market
Defined by products substitutability among buyers.
FACTORS AFFECTING A MARKET MODEL
1. Number of sellers or firms
Important to the amount of competition in a market.
2. Product type
Can be identical from seller to seller or be different, if a firm can be distinguish its product from those of its competitors,
non-price completion can arise.

3. Barriers to entry and exit

The ease with which a firm may enter or leave a market.
4. The control over price

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 Refers to large control over price, or control price depends on the product differentiation.
MARKET STRUCTURES
PURE COMPETITION
Characteristics
 Large number of independent sellers.
 Identical products are offered for sale.
 Easy entry and exit from the market.
Control Over Price
 Price Takers – Sellers with no control over the price of their products. (Market demand and market supply determine
the equilibrium price and quantity of a product.)
Long-Run Position
 Cost of production is as low as it can possibly be.
 Price of the product is as low as possible.
Non-Price Competition
 Firms focus on a feature other than price to attract buyers to their products.
 Does not occur in purely competitive markets.
Effect of Entry and Exit
Entry
 Firms are attracted to enter a market when economic profit is being made by individual firms in that market.
 This causes the market supply to increase and the equilibrium price to fall.
Exit
 Firms drop out of a market in the long run when others begin to operate at a loss.
 Causes the market supply to decrease and the equilibrium price to rise.
MONOPOLISTIC COMPETITION
Characteristics
 Large number of sellers, but not as many as in pure competition.
 Differentiated products.
 Fairly easy entry into and exit from the market.
Control Over Price
 Due to the differentiated products, a seller may raise the price of a product and lose only some, but not all, of its
buyers.
 Buyers do not view the product of one seller as a perfect substitute for another, and this allows the seller to increase
prices.
Non-Price Competition
 Due to differentiation, non-price competition can occur through: Packaging, parking, facility ambience, service,
location, quality, selection, guarantees, etc.
OLIGOPOLY
Characteristics
 Market is dominated be few large sellers.
 Products may be differentiated or identical.
 Entry to the market is quite difficult.
Control Over Price
 Mutual Interdependence- few sellers exist in the market that each seller weighs the action and reactions of rivals in
decision making.
Non-Price Competition
 Depends on whether the products are identical or differentiated.
MONOPOLY
Characteristics
 Only one seller.
 No need to consider the issue of product differentiation.
 No possibly of entry by new sellers.
Monopolist Examples
 Public Utilities
- Regulatory agencies may deny permission for new sellers to enter the market.
 Ownership of a Patent
- Patent may cover a wide range of manufacturing processes.
Control Over Price
 More control over its price compared to firms in any other market.

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  Its demand curve is the market demand curve.
Demand for a Monopolist’s Product
 Price Searcher – firm searches its own downward- sloping demand curve to find the price –output combination that
maximizes its profit.
Non-Price Competition
 May be designed to make people aware of the good or service itself, not the seller.

SUMMARY OF MARKET STRUCTURE

Characteristics Perfect Monopolistic Oligopoly Monopoly
Competition Competition
Number of Sellers Large Many Few One
Type of Product Identical and Differentiated Homogenous or Unique or no close
Homogeneous Differentiated substitution
Entry Condition Very easy Easy Difficult Impossible
Control Over Price None Some Considerable Some
Examples Wheat. corn Food, Clothing Automobiles, Local phone service,
cigarettes electricity

Activity 1
Directions: Fill in the web with all of your ideas about market structure.

Market Structure

Activity 2
Directions: Write some examples of goods that can be found in different market structures.
1. Perfect Competition
a. c. e.
b. d.
2. Monopolistic Competiton
a. c. e.
b. d.
c.
3. Oligopoly
a. c. e.
b. d.
4. Monopoly
a. c. e.
b. d.

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