Competition, Monopolies and Oligopolies

Understand competition, monopolies, and oligopolies: economics worksheet for high school.

Competition is synonymous with what? (1) Friendship Rivalry Companionship Partners Sort the following features into groups based on whether they are found in either competitive markets, with monopolies or with oligopolies. Competitive markets Large number of buyers and sellers Products in the market are close substitutes Low barriers to entry No control over the price charged Free flow of information (for consumers and producers) Monopolies One business dominates Unique / highly differentiated product Price-maker Barriers to entry exist Oligopolies Few firms Large firms dominate Different products (but still close substitutes) and wide product ranges Barriers to entry – invest heavily in branding Collusion – informal agreements to restrict competition Non-price competition e.g. via product, promotion or place Firms generally hate competition because they are forced to do what? (4) Innovate Expand Operate as efficiently as possible Raise their prices Provide quality products with good service Charge acceptable prices Expand their market share Introduce new product ranges Innovation leads to what? (1) Differentiation Consolidation Rationalising Downsizing Competition and the economy Firms have to operate efficiently to survive. They need to keep costs down so they can lower their prices and attract customers.As it gives them a competitive edge over their rivals, it could involve new products, new production methods etc.As some factors of production are immobile and can’t be changed or reallocated quickly. Which of the following is likely to be a benefit to the economy of competitive markets? (1) Higher interest rates Better resource allocation due to less waste Factors of production are more mobile Lower unemployment Which of the following is a feature of a competitive market? (1) There are a limited number of sellers in the market Each firm has total control over the price charged There are lots of sellers in the market There are high barriers to entry What is it called when it's more efficient for one firm to supply a market? (1) Economies of scale Competitive market Oligopoly Natural monopoly Which of the following are advantages of having monopoly? (3) They can fully exploit economies of scale They are able to only compete via price There are high barriers to entry and so they are protected from competitors They have low costs Their workers are always satisfied They make high profits They are able to help the customer maximise their benefit Sort the following advantages and disadvantages into their correct groups. Monopoly - Advantages (4) It is more efficient They can fully exploit economies of scale Often make high profits Are able to invest more in research and development, which can lead to greater innovation Monopoly - Disadvantages (4) Higher prices (restricted output) Restricted choice (consumers can’t swap providers) Lack of innovation (no need to invest in RD) Inefficiency (less incentive to control costs) Oligopoly - Advantages (5) Sometimes more choice, as firms seek to differentiate Possibly better quality, as firms differentiate by adapting their products Economies of scale – cost savings can be passed on to the consumer Innovation – high profits could be spent on RD Stable prices – as firms seek to avoid price wars, consumers are given price certainty Oligopoly - Disadvantages (3) Consumers will not benefit from this type of market if there is no competition These businesses are tempted to collude and restrict competition, fix prices and limit supply Sometimes a cartel might exist, where a group of firms get together and agree on pricing or output levels e.g. OPEC Which of the following is a possible disadvantage of oligopoly? Lower prices Collusion More choice More innovation Which of the following industries is likely to be oligopolistic? Chicken farming Petrol Restaurant Flower selling Monopolies and Oligopolies Word Search! To mark a word click its first letter then click its last. COMPETIITION INFORMATION SUBSTITUTES EFFICIENCY PRICEMAKER INNOVATION OLIGOPOLY COLLUSION DOMINATE MONOPOLY BARRIERS RIVALRY TRADING CONTROL NATURAL CARTEL GOOGLE FAIR ACT