Groups and starter (3 minutes):
•
•
Define the term
‘market’
In what different ways
can we categorise a
market?
1.
2.
3.
4.
5.
Gavin & Rob
Stephanie & Katie
Dan & Luke
Ellis & Steven
Lawrence & Stuart
Market structure/Theory of the
firm introduction
Lesson aims:
To identify the main ways to categorise a market
and the basic criteria to define market structures
To understand what a concentration ratio is and
how to calculate one
To be able to explain the basic assumptions of the
main types of market structure
Ways to categorise a market
•
•
•
•
Number of firms
What they do
Size of the businesses
How similar the
products/services are
• How fierce the
competition is + ease of
entry and exit
• The knowledge each
firm has
‘Market’ research pair activity (10 minutes)
•
Use your own knowledge
and research on the internet
to help you describe the
following about your given
market (note down):
a) The main firms and number
of firms in the industry
b) How they compete with
each other and how fierce
the competition is
c) How similar the
products/services are
between the competitors
1. Gavin & Rob – Fast
food outlets
2. Stephanie & Katie –
Milk
3. Dan & Luke –
Newspapers
4. Ellis & Steven –
MP3/MP4
players/phones
5. Lawrence & Stuart –
Baked beans
Feedback
Concentration ratios
• We can also categorise
what type of market a
firm is in by using the
concentration ratio.
• This is performed by
calculating the market
share of the firms in the
market, and is often
either a ‘three-firm’ or
‘five-firm’ concentration
ratio.
Concentration ratios calculations
(6 minutes)
Calculate the three-firm and five-firm
concentration ratios of the markets on the sheet
You can do this by adding up the percentages of
the biggest three or five businesses in the market
Extension question:
What do they tell you about the markets?
Barriers to entry and exit
• Barriers to entry and exit
indicate how easy or hard it
is for new firms to come
into (i.e. start up in) or
leave (i.e. go out of
business) a market
• For example, it would be
very difficult for a new
brand of cola to be more
popular than Coca-Cola and
Pepsi, but relatively easy for
a new window cleaner to
set up in Crowthorne
Assumptions pair activity (8 minutes)
• Using the appropriate pages
and your own knowledge and
understanding, write four key
points about the market
structure you are given
• Some of these could be some
of the main assumptions, how
many firms there are, how the
firms compete, and so on that
we discussed earlier
Extension question:
Can you think of any examples
of markets/products/services
with your market structure
type?
1. Gavin & Rob – Perfect
competition, p.323-329
2. Stephanie & Katie –
Oligopoly, p.346-351
3. Dan & Luke – Monopoly,
p.330-336
4. Ellis & Steven –
Monopolistic competition,
p.343-345
5. Lawrence & Stuart –
Monopsony, p.337-341
Complete Market structures
assumptions summary sheet
Mini whiteboards activity – get them
ready and get a pen that works…
Mini whiteboards activity
1. Supermarkets
2. Lettuce
3. Water supply
4. Socks
5. Motorway services
6. Sports shoes
7. Apples
8. Teaching trade unions
9. Network rail
10. Wine producers
• Write on your mini
whiteboard which of
the market structures
you think the market
is, either:
a) Perfect competition
b) Oligopoly
c) Monopoly
d) Monopolistic
competition
e) Monopsony
Market structure activities
1. Question 1, p.316
2. Question 2, p.317
Extension question:
Question 4, p.319
Quick questions
1.
2.
3.
4.
5.
What is a market?
How can we categorise a market?
What is a concentration ratio?
What are barriers to entry and exit?
What is the difference between perfect and imperfect
knowledge?
6. What is branding?
7. What are the main assumptions of perfect competition?
8. What are the main assumptions of oligopoly?
9. What are the main assumptions of monopoly?
10. What are the main assumptions of monopolistic
competition?
11. What are the main assumptions of monopsony?