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Lecture 3

RSM219H1 Lecture Notes - Lecture 3: Monopolistic Competition, Perfect Competition, Lenovo

Rotman Commerce
Course Code
Chris Bovaird

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Lecture 3
Monday, September 26, 2011
10:27 AM
19th slide:
-economic system like saying a country; using the factors of production different set of laws and priority
-use the factors of production to use what people want to be better of their needs
-market economies where private individuals make most of deicisions
-market is not a physical place it; the exchange of buys offer and sell offers
-economy theory a market is an exchange of buy offers and exchange offers
-not all market are the same; the ability of buyers to negoitate a good price <- depends on how many
people are out to sell you stuff.
-4 degrees of competitions
20th slide:
-degree is basically how many choices I have
-perfect competition; pure competition
-a perfectly competivately market a industry set to be perfectly compativitly
-you have lots of lots of choice; lots of things that you are able to buy that for are sell
-no one seller that has more money, has a bigger image, has more branches
-all are small; no market have a large business that takes over
Such as barber shops, key cuts
-more or less sell the same thing; and charge the same price because they are lots of places that offer
the same thing
-ex. Fruits and vegetables is an example of a product that sold at hundreds of places and loads of it
21st slide:
-monopolistic competition; also know as second degree of competition
-an industry where lots of people make the same kind of product; the difference between 1st degree
competition in a monopolistic competition while the vast majority are small, are more less the same. In
mono small number suppliers who are BIG who are rich, have lots of money can engage in pretty fancy
advertisment, BRANDED or DIFFERNTATED. Ex. Nike good in branding can conveince that their running
shoes are better.
-purchaser thinks they have little less choices; shop around a little less.
-might be willing to pay a little bit more
-vast majority of manufacturing and retailors are more or less the same.
-associating a brand with a good; like nike with good running shoes or starbucks with good coffee
-small number of suppliers who are big that are able to differntiate themselves.
-laptops like lenovo compared to apple.
-york compared to uft; but have all forms of businesses in them
22nd slide:
Oligopoly: small number of supplies (4,5 etc)
-all the supliers are big/large
-because in that type of industries takes lots of capital/money to start or run the business
-lots of capital to make a sufficent busineses
-you need lots of 100s employeers
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-you already know or are familiar with the 3-4 providers
-when you have limited amount of supplies; they watch eachother often carefully cause want market
share from eachother
-wants to make themselves different "differnation" between eachother; like TD friendly RBC the biggest
etc.; colour distinguishes
-Ex. CIBC, TD, RBC; competing very hard with eachother
-they compete so hard to compete with eachother; because if you need thousands of employess you
need more money to operate.
-we have limited supplies so we can price compare between 3,4,5 companies
-industries is hard to enter and hard to access
-ex. Telephone suppliers; rogers, telus, bell <- expensive industires to get into & oil/gas industries
23rd slide:
Monopoly: only one supplier; small number of supplier
-can set whatever price they want; cause no one like them
-cause they are the only provider.
-100% market share.
-take it or leave it; advantage of being a monopoly
-microsoft is an example of monopoly company that used it power to buy a second rate product; in
browsing software had 90% market share forcing people to buy their browsing service if they bought
their operating system even though it wasn’t as good as Nexit USA took it to court to make people buy
something that is second rate that make pay for it.
Chapter 2:
2nd slide:
-purpose of economic system to give them food,clothes something meaningful to do
-how can we measure the canadian economic system? Is canada better place to live based on its
-measure of economic performance; these measure tell us- is the economy deliever; is it doing the job it
is intending to do
3rd slide:
-purpose of an economic system what are we trying to do when we have an economy; take factors of
production and turn out things that people want
-to encourage business things that people might want so ppl will buy it that’s why a business exist
-business is succefull in bringing the right people, investement; the people will reach into their wallet
and buy the product
-they get revenue u get ur item
4th slide:
-is the canadian,usa,china economy doing good or bad?
-ask these questions; listed on the slides
5th slide:
-the data to answer the questions ^
-GDP; gross-big domestic-in house/within our house/boarder product-the result of doing
something/what gets made
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