SENIOR HIGH SCHOOL Applied Economics Market Structures: Monopoly and Oligopoly Self-Learning

Module 15 666 Quarter 3 Applied Economics Quarter 3 – Self-Learning Module 15: Market Structures:
Monopoly and Oligopoly First Edition, 2020 Republic Act 8293, Section 176 states that no copyright shall
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Schools Division of Pasig City Development Team of the Self-Learning Module Writer: Emmanuel B.
Penetrante Editor: Edna D. Camarao, PhD Reviewers: Content/Language: Edna D. Camarao, PhD, Dennis
T. Alex, Hedelita B. Calonia Technical: Emmanuel B. Penetrante Illustrator: Name Layout Artist: Name
Management Team: Ma. Evalou Concepcion A. Agustin OIC-Schools Division Superintendent Aurelio G.
Alfonso EdD OIC-Assistant Schools Division Superintendent Victor M. Javeña EdD Chief, School
Governance and Operations Division and OIC-Chief, Curriculum Implementation Division Education
Program Supervisors Librada L. Agon EdD (EPP/TLE/TVL/TVE) Liza A. Alvarez (Science/STEM/SSP)
Bernard R. Balitao (AP/HUMSS) Joselito E. Calios (English/SPFL/GAS) Norlyn D. Conde EdD
(MAPEH/SPA/SPS/HOPE/A&D/Sports) Wilma Q. Del Rosario (LRMS/ADM) Ma. Teresita E. Herrera EdD
(Filipino/GAS/Piling Larang) Perlita M. Ignacio PhD (EsP) Dulce O. Santos PhD (Kindergarten/MTB-MLE)
Teresita P. Tagulao EdD (Mathematics/ABM) Applied Economics SENIOR HIGH SCHOOL Market
Structures: Monopoly and Oligopoly Quarter 3 Self-Learning Module 15 Introductory Message For the
facilitator: Welcome to the Senior High School – Applied Economics Self Learning Module on Market
Structures: Monopoly and Oligopoly! This Self-Learning Module was collaboratively designed, developed
and reviewed by educators from the Schools Division Office of Pasig City headed by its Officer-in-Charge
Schools Division Superintendent, Ma. Evalou Concepcion A. Agustin, in partnership with the City
Government of Pasig through its mayor, Honorable Victor Ma. Regis N. Sotto. The writers utilized the
standards set by the K to 12 Curriculum using the Most Essential Learning Competencies (MELC) in
developing this instructional resource. This learning material hopes to engage the learners in guided and
independent learning activities at their own pace and time. Further, this also aims to help learners
acquire the needed 21st century skills especially the 5 Cs, namely: Communication, Collaboration,
Creativity, Critical Thinking, and Character while taking into consideration their needs and
circumstances. In addition to the material in the main text, you will also see this box in the body of the
module: As a facilitator you are expected to orient the learners on how to use this module. You also
need to keep track of the learners' progress while allowing them to manage their own learning.
Moreover, you are expected to encourage and assist the learners as they do the tasks included in the
module. Notes to the Teacher This contains helpful tips or strategies that will help you in guiding the
learners. For the learner: Welcome to the Applied Economics Self Learning Module on Market
Structures: Monopoly and Oligopoly! This module was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and time. You will be enabled to
process the contents of the learning material while being an active learner. This module has the
following parts and corresponding icons: Expectations - This points to the set of knowledge and skills
that you will learn after completing the module. Pretest - This measures your prior knowledge about the
lesson at hand. Recap - This part of the module provides a review of concepts and skills that you already
know about a previous lesson. Lesson - This section discusses the topic in the module. Activities - This is
a set of activities that you need to perform. Wrap-Up - This section summarizes the concepts and
application of the lesson. Valuing - This part integrates a desirable moral value in the lesson. Posttest -
This measures how much you have learned from the entire module. After going through this module,
you are expected to: 1. define monopoly and oligopoly; 2. describe the characteristics of monopoly and
oligopoly; and 3. differentiate monopoly from oligopoly. Directions: Read each statement carefully.
Choose the letter of the best answer and write it on a separate sheet of paper. 1. A market structure
with a small number of large firms. A. Monopoly B. Oligopoly C. Monopolistic Competition D. Perfect
Competition 2. A market structure where a specific person or enterprise is the only supplier of a
particular good. A. Monopoly B. Oligopoly C. Monopolistic Competition D. Perfect Competition 3. It is
characterized by the profit maximizer, price maker, high barriers to entry, single seller, and price
discrimination. A. Monopoly B. Oligopoly C. Monopolistic Competition D. Perfect Competition
EXPECTATIONS PRETEST 4. A market structure where collusion exists. A. Monopoly B. Oligopoly C.
Monopolistic Competition D. Perfect Competition 5. It refers to a non-competitive, secret, and
sometimes illegal agreement between rivals which attempts to disrupt the market's equilibrium. A.
merger B. subsidiary C. collusion D. none of the above Directions: Describe the monopolistic competition
according to the following characteristics. 1. Number of Sellers -
_________________________________________________________
_________________________________________________________. 2. Type of products -
_________________________________________________________.
_________________________________________________________ 3. Entry/exit to market -
______________________________________________________
______________________________________________________. 4. Price Power -
_______________________________________________________________
_______________________________________________________________. RECAP This module will
discuss the two market structures which are categorized as imperfect competition. Oligopoly Oligopoly
is a market structure with a few large firms, none of which can keep the others from having significant
influence. Few sellers control most of the production of a good or service and setting prices.
Characteristics of Oligopoly 1. There are very few sellers that control the entire market. Most of these
are in the oil industry, transportation, and telecommunication. 2. Products may be differentiated or
identical, but they are usually standardized. Sellers offer a differentiated and identical product such as
petroleum which have different variants. In an oligopoly, firms often compete on non-price competition.
This makes advertising and the quality of the product are often important. 3. In an oligopoly, there must
be some barriers to entry to enable firms to gain a significant market share. These barriers to entry may
include brand loyalty or economies of scale. However, barriers to entry are less than monopoly. 4. The
actions of one firm affect all producers. Companies will be affected by how other firms set price and
output. 5. There are different possible ways that firms will compete and behave this will depend upon
(a) the objectives of the firms; e.g. profit maximization or sales maximization, (b) the degree of
contestability; e.g. barriers to entry, and (c) government regulation. 6. There are different possible
outcomes in an oligopoly market: (a) stable prices – firms concentrate on non-price competition, (b)
price wars (competitive oligopoly), and (c) collusion- leading to higher prices. Collusion is an agreement
to act together or cooperatively. It is illegal, but tacit collusion may be hard to determine. For collusion
to be effective, there needs to be barriers to entry. A cartel is a formal collusive agreement. For
example, the Organization of Petroleum Exporting Countries (OPEC) is a cartel seeking to control the
price of oil. LESSON Monopoly A monopoly exists when a company and its product offerings dominate a
sector or industry. The existence of a monopoly depends on how easy it is for consumers to substitute
the products for those of other sellers. Characteristics of Monopoly 1. There is only one seller in the
market, meaning the company becomes the same as the industry it serves. A single seller has control of
the entire supply of raw materials like MERALCO, Manila Water, and Maynilad. 2. The producer will
enjoy economies of scale, which are saved from a large range of outputs. Economies of scale are cost
advantages reaped by companies when production becomes efficient. Companies can achieve
economies of scale by increasing production and lowering costs (Kenton, 2020). 3. The company that
operates the monopoly decides the price of the product that it will sell without any competition keeping
their prices in check. As a result, monopolies can raise prices. 4. Competitors are not able to enter the
market, and the monopoly can easily prevent competition by developing their dominant position in an
industry. The reason could be due to legal barriers like government restrictions, patents, and copyrights.
Activity 1: Describe the Market Directions: Differentiate monopoly from oligopoly. Provide your answer
in the table below. Market Structure Number of Seller Type of Product Entry/Exit to Market Price Power
1. Oligopoly ACTIVITIES Activity 2: Market Structure Directions: Illustrate at least 3 companies that are
oligopoly and monopoly. You may use the space below. To summarize what you have learned in the
lesson, answer the following questions: 2. Monopoly WRAP-UP 1. What is a monopoly? an oligopoly? 2.
What are the characteristics of a monopoly? an oligopoly? 3. What is the difference between monopoly
and oligopoly? Reflect on this! “Nobody has a monopoly on good ideas” – Kevin O’Leary Directions: Read
each statement carefully. Write T if the statement is correct, otherwise write F. ____________1.
Monopoly has no close substitute goods available. ____________2. Independent pricing decisions made
by an oligopolistic firm on a regular basis that results in industry-wide prices. ____________3. It is easy
to enter in a monopoly market. ____________4. Organization of Petroleum Exporting Countries (OPEC)
is an example of cartel. ____________5. Collusion is permitted by the government. VALUING POSTTEST
References Dinio, R. and Villalis, G. Applied Economics. Rex Book Store, Inc. Sampaloc, Manila, 2017.
Boundless. "Boundless Economics." Lumen. Accessed July 30, 2020.
https://courses.lumenlearning.com/boundlesseconomics/chapter/introduction-to-monopoly/. Kenton,
Will. "Monopoly." Investopedia. January 29, 2020. Accessed July 30, 2020.
https://www.investopedia.com/terms/m/monopoly.asp. Kenton, Will. "What You Need to Know About
Economies of Scale." Investopedia. July 09, 2020. Accessed July 30, 2020.
https://www.investopedia.com/terms/e/economiesofscale.asp. ""Nobody Has a Monopoly on Good
Ideas." #marketing #quotes #Kreatepop: Leadership Quote, Marketing Quotes, Be Yourself Quotes."
Pinterest. Accessed July 30, 2020. https://www.pinterest.ph/pin/414894184394117502/. Pettinger,
Tejvan. "Oligopoly." Economics Help. November 26, 2019. Accessed July 30, 2020.
https://www.economicshelp.org/microessays/markets/oligopoly/. Young, Julie. "Dynamics and Unfair
Advantages of Collusion." Investopedia. January 29, 2020. Accessed July 30, 2020. POSTTEST: 1. T 2. T 3.
F 4. T 5. F KEY TO CORRECTION https://www.investopedia.com/terms/c/collusion.asp#:~:text=Collusion
is a non-competitive,gain an unfair market advantage.