BellringerBellringer1. What is the point of the 1. What is the point of the

game “Monopoly”?game “Monopoly”?No we won’t be playing it No we won’t be playing it

in this class.in this class.2. How would school 2. How would school lunches change if TUSD lunches change if TUSD was notwas not the only firm the only firm selling lunch here at selling lunch here at

Pueblo?Pueblo?We will take some notes then look at our posters from last week

MonopolyMonopoly A market for a A market for a

good/service with good/service with oneone dominate sellerdominate seller

Firm has Firm has totaltotal “pricing “pricing power”power”

Has extremely high entry Has extremely high entry costs, OR impossiblecosts, OR impossible

Types of surplusTypes of surplus Consumer surplusConsumer surplus: difference between : difference between

budget and actual pricebudget and actual price

Producer surplusProducer surplus: difference between : difference between cost and price (really just profit)cost and price (really just profit)

Budget:$50

Actual:$40

Monopoly MarketsMonopoly Markets

Price DiscriminationPrice DiscriminationThink/Pair/Share

Examples?Senior discountStudent discountEbay

Types of MonopolyTypes of Monopoly

GeographicGeographic Only firm in a Only firm in a

certain areacertain area Small townsSmall towns Other Other

example?example?

Types of MonopolyTypes of Monopoly

GovernmentGovernment Granted by the Granted by the

governmentgovernment ““public goods”public goods”

Types of MonopolyTypes of Monopoly

TechnologicalTechnological (Patents)(Patents) (Copyrights)(Copyrights) Due to Due to

technologytechnology Software, Software,

biotechnology, biotechnology, artisticartistic

examplesexamples

On your white boards On your white boards Name the type of monopolyName the type of monopoly

1. Popcorn at Harkins movie theater1. Popcorn at Harkins movie theater

2. Interstate Highways like I-10 2. Interstate Highways like I-10

3. The only mechanic in a small town3. The only mechanic in a small town

4. School lunches at Pueblo4. School lunches at Pueblo

5. Snacks in certain Pueblo classrooms5. Snacks in certain Pueblo classrooms

6. Secret Formula for Coca-Cola6. Secret Formula for Coca-Cola

7. US military7. US military

Closure questionsClosure questions

3.3. Why do economists worry about Why do economists worry about monopolies? (hint: think about prices)monopolies? (hint: think about prices)

4.4. Why are technological monopolies Why are technological monopolies allowed to exist? (think about allowed to exist? (think about creative businesses)creative businesses)

5.5. Do you think government monopolies Do you think government monopolies are always positive for consumers? are always positive for consumers? (consider our school lunches, or the (consider our school lunches, or the MVD)MVD)

Group Poster AssignmentGroup Poster Assignment Make a poster to teach other students your Make a poster to teach other students your

market model:market model: Perfect Competition (pg 318-319)Perfect Competition (pg 318-319) Monopolistic Competition (361-366)Monopolistic Competition (361-366) Oligopoly (367-372)Oligopoly (367-372) Must include:Must include: (2 person group (2 person group

maximum)maximum) Market Conditions explanationMarket Conditions explanation Why positive for consumers?Why positive for consumers? How could firms be successful in industry?How could firms be successful in industry? 4+ examples of firms or industries 4+ examples of firms or industries

(w/pictures)(w/pictures)