MGTA01- Lecture 3: Thurday, 23 January 2014
- Finish chapter 1 and start Chapter 2
- Not all markets are the same. Some have lots of buyers and not many sellers and vice
verca. Some have only one buyer and only one seller. In a market economy, the more
sellers you have, the more chance buyers have to buy things and the more buyers you
have, the more chance that sellers have to increase their price.
- Degrees of Competition – how many sellers are there and how much choice you have
as a buyer. There are 4 kinds of markets.
• Perfect/Pure Competition – a market with a lot of suppliers, with all of the suppliers
- no individual producer or supplier has more influence than any other, no one
has more market share than the other, they are not more famous than each
other and pretty much every shop or manufacturer of this service is one in
millions and indistinguishable.
- they all sell the same thing and sell at more or less the same price
- Example: a carton of milk can be bought almost everywhere in more or less
the same amount of money, gas stations are perfectly competitive market
• Monopolistic Competition – a market characterized by lots of suppliers, where
most of the suppliers are pretty small like perfect competition, but in a monopolis