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Session 6 Market Structures

Session 6 Market Structures. Disclaimer: The views expressed are those of the presenters and do not necessarily reflect those of the Federal Reserve Bank of Dallas or the Federal Reserve System. TEKS.

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Session 6 Market Structures

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  1. Session 6Market Structures Disclaimer: The views expressed are those of the presenters and do not necessarily reflect those of the Federal Reserve Bank of Dallas or the Federal Reserve System.

  2. TEKS (9) Economics. The student understands types of market structures. The student is expected to: (A) describe characteristics and give examples of pure competition, monopolistic competition, oligopoly, and monopoly; and (B) identify and evaluate ordinances and regulations that apply to the establishment and operation of various types of businesses.

  3. TEKS (16) Personal financial literacy. The student understands types of business ownership. The student is expected to: (A) explain the characteristics of sole proprietorships, partnerships, and corporations; (B) analyze the advantages and disadvantages of sole proprietorships, partnerships, and corporations; (C) analyze the economic rights and responsibilities of businesses, including those involved in starting a small business; and

  4. Teaching the Terms • Pure competition • Monopolistic competition • Oligopoly • Monopoly • Sole proprietorship • Partnership • Corporations • Ordinance • Product differentiation • Intellectual property • Liability • Financial capital • Profit

  5. Two Classification Systems • In what type of competitive environment does the business operate? • How has the company chosen to organize itself?

  6. Markets • A market facilitates the interaction of a buyer and a seller as they complete a transaction • Buyers, as a group, determine the demand • Sellers, as a group, determine the supply

  7. Competitive Markets • Identical goods or services • Enough buyers and sellers so that no participant can influence the market price – everyone is a price taker

  8. Imperfect Competition • Goods or services that are not identical • Restaurants, gas stations and hotels • Markets dominated by single or small number of producers • Computer operating systems, automobiles, diamonds,

  9. Market Structures

  10. Market Structures

  11. Natural Monopolies • Some industries are characterized by conditions that create barriers to entry • Location • Economies of scale • Utilities are the classic example • Water • Cable television • Electricity

  12. Protected Monopolies • Barriers to entry in some industries are the result of specific protections granted by government • Licenses • Patents • Examples • Concessions in national park • Pharmaceuticals

  13. Types of Firms

  14. Sole Proprietorship

  15. Partnerships • Articles of partnership or partnership agreement define rights and responsibilities • Types of partnerships • General partnerships • Limited partnerships • Limited liability partnerships

  16. Partnerships

  17. Corporations • Articles of incorporation create an independent entity • Owners are called shareholders • Shares may or may not be publicly traded • Shareholders elect board of directors • Board of directors selects leadership of the firm

  18. Corporations

  19. Questions?

  20. Application • http://www.econedlink.org/lessons/EconEdLink-print-lesson.php?lid=533&type=educator • Facebook story

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