LEARNING ACTIVITY SHEET

For Applied Economics

S.Y. 2020 – 2021

Market Structures
Module 5 Week 5

This LAS covers the learning competencies:

The learners differentiate market structures in terms of number of sellers, types
of products, entry/exit to market, pricing power, etc.

Content Standard:

The learner demonstrate an understanding of economics as an applied science

and its utility in addressing the economics problems of the country.

Performance Standard:
The learners shall be able to differentiate various market structures in terms of:
a. number of sellers
b. types of products
c. entry/exit to market
d. pricing power

Lesson Objectives:
You will represent real-life situations on market and its structures.
Specifically, this learning activity sheet will help you to:

1. differentiate various market structures in terms of number of sellers;

2. types of products, entry/exit to market and pricing setting power;
3. construct a graph detailing characteristics of each market structure; and
4. appreciate the importance of being competitive in the market.
 BRIEF INTRODUCTION

Before we explore further our new lesson, read and analyze the statements
below. This is a “think, learn and challenge” opportunity for you to connect more to
the ideas on market and its structures.

We think the Mac Apple will sell millions,

but we didn't build the Mac for anybody
else. We built it for ourselves. We were the
group of people who were going to judge
whether it was great or not. We weren't
going to go out and do market research. We
just wanted to build the best thing we could
build.

Steve Jobs
https://int.search.tb.ask.com/search/AJima
ge.jhtml?
https://www.brainyquote.com/quotes/steve_jobs_416924?src=t_market

What Are Market Structures?

Business entities comprise also an economy. In the economy, firms differ from
one another on how to allocate their resources to produce the products and how to
deliver them to the consumers. They have to plan how to meet the demands of the
consumers and participate in the market.
From the statements of the founder of Apple, would you agree that the secret
for being successful in the industry is to build the best thing (innovate the product)
and not more on the market structuring? As a customer and entrepreneur, do you
agree that market structures are important considerations to be competitive in the
market? You can at least answer these questions when you appreciate more the
concepts of the market and its structures.
When a firm enters the market world, it has to decide for the ideal market
structure in order stay longer in the industry. Take note that, to assess the business
environments, is a big help to remain competitive in the market. Let’s get to know
about the different market structures. In the article of AU Online (2017), A Guide to
Types of Market Structures, it defined market structure as a starting point for
assessing economic environments of firms. It also mentioned market structure as a
tool of understanding of how companies and markets work allows business
professionals and leaders to accurately judge industry and market news, policy
changes and legislation and how the economy shapes important decisions.
https://online.aurora.edu/types-of-market-structures
The Market Structures and Characteristics

Let us proceed analyzing the market

structures. Each market structure has
characteristics which determine the relations
between the sellers to another, of sellers to
buyers, company to investors, economists to
government and more which affect the
behavior and interaction of buyers and sellers.
Remember that market is a set of buyers and
sellers who determine the price of
goods and services. source: www.vector.com

Some of the market structure’s characteristics include: type of the

products produced, number and size of sellers and buyers, price of products
sold in the market, the ease or difficulty of entering and exiting the industry
and the number of companies in the market (source: AU Online 2017).

Pure (Perfect) Competition

a) Many and small sellers and no

one can affect the market
b) Homogeneous product is
offered by the companies
c) Free entry to and exit from
the industry
d) All firms only have the motive
of profit maximization
e) No concept
of consumer preference
• Consumers can dictate the price www.dreamstime.com
1. Examples: agricultural markets such as wheat, cereals foreign
exchange markets, etc.

7
Monopoly
2. A single seller and no competitors
in the market Limited stocks
*Very unique and highly predictable
product or no close substitutes
3. The firm is the price maker and
the firm has considerable control
over the price
*It can control the quantity supplied
4. Entry/exit is difficult and blocked
5. Sole seller has the full power to
set prices
*Examples are public
transportations like MRT, computer
software manufacturer like Microsoft www.ayokay.com

Monopolistic Competition
• Multiple giant firms produce similar
and highly predictable products
• Profit maximization occurs
• where MC=MR
• Firms compete for economic profits
• A competitive market that has only a
handful of buyers and sellers
• Sellers offer close substitutes
products to consumers
1 Comparatively easier entry and
exit
2 Examples: cosmetics,
garments,
medicines, shoes, car washes,
automotive services, etc.
Oligopoly a
m
i
• Few large firms in the industry l
• Standardized or differentiated .
products/goods c
o
• Various barriers to enter the m
market, entry is difficult and huge
capital investment may be the barrier to
enter
• The firms set and control their
prices
• Examples: aluminum and steel,
oil and
gas, automobile, airlines, entertainment,
hotel and restaurants, coffee shops, etc.
 Written Task
A. Multiple Choice
Directions: Read the questions carefully. Choose the letter of the correct answer.
Do this in a separate sheet of paper.

1. Which does not belong to the group of market structures?

a) Monopoly c) Perfect Competition
b) Oligopoly d) Market Competition
2. Which of the following is the most competitive market structure?
a) Perfect competition c) Oligopoly
b) Monopolistic competition d) Monopoly
3 Which of the following is the least competitive market structure?
a) Perfect competition c) Oligopoly
b) Monopolistic competition d) Monopoly
4 Which of the following is NOT a feature of a monopolistic competition?
a) Numerous sellers c) Numerous buyers
b) Product differentiation d) Homogenous price
5 What market structure if price is the key for competing with other firms?
a) Monopoly c) Monopolistic competition
b) Oligopoly d) Perfect competition
6. When the revenue is equal to price, which types of market structure?
a) Competitive monopoly c) Perfect competition
b) Oligopoly d) All are types
7. Which of the following is NOT a type of market structure?
a) Competitive monopoly c) Perfect competition
b) Oligopoly d) All are types
8. If ABM firm sells its product in a market, with many sellers and buyers of
homogeneous product, and unlimited resource mobility, the structures is a/an
a) monopolist c) perfect competitor
b) oligopolist d) monopolistic competitor
9. If the ABM firm sells homogenous products in a market, with a single seller and many
buyers, for which there are no close substitutes to the products, it is a/an
a) monopolist c) perfect competitor
b) oligopolist d) monopolistic competitor
10. If ABM firm sells its differentiated products in a market, with many sellers and
buyers, the structure is a/an
a) monopolist c) perfect competitor
b) oligopolist d) monopolistic competition

B. Identification
Directions. Read the questions carefully. Identify the type of market structure for each
item.

1. If Company ABC competes with several firms in the industry but with product
homogeneous on shelves, what market structure does it enter?
_________________________________
2. If BCX Company competes with few large firms in the industry but with
differentiated products on shelves, what market structure does it enter?
_________________________________
3. If there are several barriers on the entry and exit of firms in the industry due to
huge amount of capital needed, what market structure are they in?
____________________________
4. If Company XYZ is the only provider of electricity energy in Metro Manila, what
market structure does it join? __________________________
5. ABM Supermarket has joined many and small marketers in the industry with
several competitors selling the same products. What market structure it has
joined? ____________________________________
C. Enumeration
Directions: Accomplish this activity independently. Below is the list of some industries
which dominate the market. Enumerate the industries which are considered perfect
competitors, monopolists, monopolistic competitors and oligopolists. Do this in your quiz
notebook as illustrated in the table

agricultural markets, internet providers, foreign exchange (FOREX) markets

electricity provider, public (MRT) transport, telecom companies, gasoline
stations, auto/car companies, flower shops, barber shops, car
wash services, automotive services

Industries and Market Structures

Perfect Monopolists Monopolistic Oligopolists

Competitors Competitors

1. 1. 1. 1.

2. 2. 2. 2.

3. 3. 3. 3.

Performance Task
Directions: Observe the behavior of the nearest market in your locality. In the columns are
the characteristics of the different market structures. Describe the market structures of
the industries in the market as to number of sellers, pricing power, type of goods or
services, and barriers to entry and exit. Complete the chart.
MARKET STRUCTURES AND CHARACTERISTICS
MARKET NO. OF CONTROL OVER TYPE OF BARRIERS TO
STRUCTURES SELLERS/ PRICE/PRICING GOODS or ENTRY/
FIRMS POWER PRODUCTS EXIT TO MARKET
Pure/Perfect
Competitors

Monopolists

Oligopolists

Monopolistic
Competitors

REFLECTIVE LEARNING SHEET

The market has always been competitive due to entries of potential

companies in a specific industry. However, due to the economic issues that our
country has been suffering since the imposition of lockdowns all over Metro
Manila, several industries have to cut down their operations before they lost all
their assets and revenues. The Covid 19 pandemic has a great impact on
business overall operations.

In your assessment, what structures of business industries could sustain

their operations in the long run? Is there any or specific structure which really
can easily dominate and exit the market? Defend your answer.
 ______________________________________________________________________
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___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
_________________________________________________________________.

Summary

There are different market structures that can characterize an economy: perfect
competition, monopolistic competition, oligopoly, and monopoly. Each of them
has its own set of characteristics, which in turn affects the decision making of
firms and the profits they can make.

In perfect competition, it is assumed that: (1) all firms maximize profits (2) there
is free entry and exit to the market, (3) all firms sell completely identical (i.e.,
homogenous) goods, (4) there are no consumer preferences

In monopolistic competition, it is assumed that: (1) all firms maximize profits (2)
there is free entry, and exit to the market; (3) firms sell differentiated products (4)
consumers prefer one product over the other.

Oligopoly structure of the market assumed that: (1) all firms maximize profits, (2)
oligopolies can set prices, (3) there are barriers to entry and exit in the market,
(4) products may be homogenous or differentiated, and (5) only a few large firms
that dominate the market, and finally

The following assumptions are made for monopolies: (1) the monopolist
maximizes profit, (2) it can set the price, (3) there are high barriers to entry
and exit, (4) there is only one firm that dominates the entire market.