Applied Economics Q3 Module 15
Applied Economics Q3 Module 15
HIGH
Economics SCHOOL
Self-Learning
Module
Market Structures: 15
Monopoly and Oligopoly
666
Quarter 3
Applied Economics
Quarter 3 – Self-Learning Module 15: Market Structures: Monopoly and Oligopoly
First Edition, 2020
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Self-Learning
Module
15
Quarter 3
Market Structures:
Monopoly and Oligopoly
Introductory Message
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.
For the learner:
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.
Posttest - This measures how much you have learned from the
entire module.
EXPECTATIONS
PRETEST
Directions: Read each statement carefully. Choose the letter of the best answer and
write it on a separate sheet of paper.
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
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.
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.
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.
ACTIVITIES
WRAP-UP
To summarize what you have learned in the lesson, answer the following
questions:
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?
VALUING
Reflect on this!
POSTTEST
POSTTEST:
1. T
2. T
3. F
4. T
5. F
References
Dinio, R. and Villalis, G. Applied Economics. Rex Book Store, Inc. Sampaloc,
Manila, 2017.
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.
Pettinger, Tejvan. "Oligopoly." Economics Help. November 26, 2019. Accessed July
30, 2020.
https://www.economicshelp.org/microessays/markets/oligopoly/.