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Economics Reviewer
Economics Reviewer
Market Structures
- When a firm enters the market world, it has to decide on the ideal market structure in
order to stay longer in the industry.
- Market structure as a tool of understanding how companies and markets work allows
business professionals and leaders to accurately judge industry.
Monopoly
- A single seller and no competitors in the market
- Very unique and highly predictable product or no close substitutes
- The firm is the price maker and the firm has considerable control over the price
- It can control the quantity supplied
- Entry/exit is difficult and blocked
- Sole seller has the full power to set price
EXAMPLES:
a. public transportations like MRT
b. computer software manufacturer like Microsoft
c. Electricity (meralco)
d. an innovation that is protected by a patent.
Monopolistic Competition
- Multiple giant firms produce similar and highly predictable
- maximization occurs
- Firms compete for economic profits
- A competitive market that has only a handful of buyers and sellers
- Sellers offer close substitutes products to consumers
- Comparatively easier entry and exit
EXAMPLES:
a. cosmetics, garments, medicines, shoes, car washes, automotive services, etc.
b. salons and spas
c. restaurants
Oligopoly
- Few large firms in the industry
- Standardized or differentiated products/ goods
- Various barriers to enter the market, entry is difficult and huge capital investment may be
the barrier to enter
- The firms set and control their prices
EXAMPLES:
a. Aluminum and steel, oil, gas, automobile, airlines, entertainment, hotel
b. telecommunications industry
Industry Sector
Includes four main industries: (34%)
1. mining and quarrying
2. Manufacturing
3. Construction
4. electricity, gas, and water supply.
Heavy manufacturing light manufacturing
Service Sector
The Philippines has five main service industries: (57%)
1. transport, storage, and communication;
2. trade and repair of motor vehicles, motorcycles, and personal and household goods;
3. financial intermediation;
4. real estate, renting, and business activities; and
5. public administration, defence, and compulsory social security
Public Sector versus Private Sector
Private goods by private sector entities are goods characterized by rivalry and excludability.
Includes food, clothes, and personal items.
Public goods are characterized by nonrivalry and non-excludability. Includes national defence,
public roads, and highways. Public parks, street lighting, drainage systems.
Club goods are characterized by excludability and nonrivalry. Includes movie houses, parks,
concerts, etc
Common goods are characterized by rivalry and nonexcludability. Includes coal, fish in the
ocean, and clean air.