Module 2

ENTREPRENEURS
IN MARKET ECONOMY

ECF3/ECM3/ECFEM
ENTREPRENEURIAL
Management

to your second
module!

This module is a combination of

synchronous & asynchronous learning
and will last for one week
Long Test will be given via
Google Form in asynchronous test

Entrepreneurs in a Market Economy

ARLENE F. MUSONES, MBA

Instructor

No part of this module may be

reproduced in any form without prior
permission in writing from the
Instructor.

September 18, 2023

Date Initiated
September 23, 2023
Date of Completion
 ENTREPRENEURS IN A MARKET ECONOMY
MODULE 2

TABLE OF CONTENTS

MODULE OUTLINE

Overview 3
Module Duration 3
Learning Objectives 3
Input Information 3
Learning Activities 3
Assessment/Evaluation 3
Assignment 3
Learning Resources 4

MODULE PROPER

Introduction

2.1 Entrepreneurs Satisfy Needs and Wants 5

Needs 5
Wants 5
Economic Resources 6
Role of Entrepreneur in the U.S. Economy 7
2.2 How economic decisions are made?
Economic System 7
The U.S. Economic System 9
Economic Choices 9
Functions of Business 9
2.3. What affects Price?
How much is enough? 10
Cost of Doing Business 11
Market Structure and Prices 12
Case Study 13

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 ENTREPRENEURS IN A MARKET ECONOMY
MODULE 2 OUTLINE

OVERVIEW
This module introduces economics and the role of entrepreneurs in a market economy. The topic will discuss the difference between
needs and wants, describes the types of economic resources, and describes the role of entrepreneurs in the economy. It will also
cover discussion regarding how scarcity affects economic decisions and explains how business functions are used to satisfy
consumers. In addition, topic will also cover about supply and demand interaction with price and cost.

MODULE DURATION

September 18 to September 23, 2023 Synchronous Meeting and Asynchronous Learning

For asynchronous learning inquiries, you may reach me through the messenger group chat from Monday to Thursday at 5pm to
8pm. or thru my GMAIL – [email protected]

LEARNING OBJECTIVES

After completing this module, you are expected to:

1. distinguish between needs and wants;
2. describe the types of economic resources;
3. explain how scarcity affects economic decisions;
4. explain how business functions are used to satisfy consumers
5. explain how supply and demand interact to determine price;
6. describe how costs of doing business affect the price of a good or service; and
7. explain the effect of different market structures on price.

INPUT INFORMATION

Entrepreneurs in a Market Economy

LEARNING ACTIVITIES

1. Group discussion during a synchronous meeting

2. Asynchronous Learning

ASSESSMENT/EVALUATION
I. Synchronous Test with a time limit.
A long test link will be provided through our group chat. This is a synchronous test with a time limit.
II. Asynchronous Learning
a. Individual Activity – Individual Learning Portfolio
b. Group Activity – Case Study

ASSIGNMENT
Individual Learning Portfolio. In your own words, (minimum of 30 words each question):
a. What role do needs and wants play in determining what is produced in an economy?
b. Why is it important for all the functions of business to work together?

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 c. Have you ever wanted to buy something, but you couldn’t find it? What role do you think supply and demand might
have played?
d. Name three (3) fixed costs in your life, how do you plan to pay them? Name three (3) variable costs that you have.
How can variable costs be like an opportunity costs?

Deadline: September 23, 2023 11:59PM

Group Activity: Use the Problem-solving process that you have learned here to answer each question in the case.

i. Case Study No. 1 Do you want it or need it?

ii. Case Study No. 2 Choose between alternatives
iii. Case Study No. 3 Avoid Personal Debt
iv. Case Study No. 4 Web Site Design

Deadline: September 30, 2023 11:59PM

LEARNING RESOURCES
Book/E-book:
Entrepreneurship by Cynthia L. Greene @2013 Cengage Learning Asia Pte. Ltd.
Entrepreneurship by Bruce R. Barringer and R. Duane Ireland, Fourth Edition
Entrepreneurship by Gabe Burton, Copyright @ 2020 Willford Press

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 ENTREPRENEURS IN A MARKET ECONOMY
MODULE 2 PROPER

INTRODUCTION
Economics is all about making choices and satisfying the wants and needs of consumers. Needs are things you must have to survive.
Three kinds of economic resources are used by entrepreneurs to produce goods and services-natural resources, human resources, and
capital resources. In a command economy, the government determines what, how, and for whom products and services are produced.
In a market economy, individuals decide what, how, and for whom products and services are produced. A mixed economy combines
elements of the command and market economics. Traditional economies are simple economies operated according to tradition or custom.
Supply is the quantity of a good or service a producer is willing to produce at different prices. Demand is the quantity of a good or service
that consumers are willing to buy at a given price. Fixed costs remain the same regardless of how much of a good or service is produced
while variable costs go up and down depending on the level of production. Market structure is determined by the nature and degree of
competition among businesses and that operate in the same industry. The four major market structures are perfect competition,
monopolistic competition, oligopoly, and monopoly.

2.1 Entrepreneurs Satisfy Needs and Wants

Needs
People have many needs. Some are basic needs, while others are high-level needs. Abraham Maslow was a psychologist who developed
a theory on the hierarchy of needs. It identifies five areas of needs – physiological, security, social, esteem, and self-actualization needs.
The theory suggests that people’s basic physiological needs such as food, clothing, and shelter, must be satisfied first before they can
focus on higher-level needs. Once basic needs are met, they will try to satisfy their security needs. When this need is filled, individuals
turn their attention to social needs, such as friendship. Esteem needs can be satisfied by gaining the respect and recognition of others.
Self-actualization needs usually involve something that provides a sense of accomplishment, such as earning a college degree.

Beyond basic needs, not all people have the same needs. Needs depend on a person’s situation. You may live in a nice house in a
gated community, so your security needs are met. Someone who lives in a high-crime are still may be trying to meet security needs.

Wants
Individuals have two different types of wants – economic wants and non-economic wants. Economic wants and noneconomic wants.
Economic wants involve a desire for material goods and services. They are the basis of an economy. People want material goods, such
as clothing, housing, and cars. They also want services, such as hair styling and medical care. No economy has the resources necessary
to satisfy all of the wants of all people for all material goods and services. The goods and services that people want must be produced
and supplies.

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People also have noneconomic wants, or the desire for nonmaterial things. These wants would include such things as sunshine, fresh
air, exercise, friendship, and happiness.
Needs and Wants Are Unlimited
Your needs and wants never end. You are limited only by what your mind can think of and what businesses make available for sale. If
you are going camping, you might need to buy a tent for shelter. One purchase often leads to another. After buying a tent, you might also
want to buy other camping supplies. Then you might want a bigger backpack to carry your new supplies.

Economic Resources
Economic Resources are the means through which goods and services are
produced. GOODS are products you can see and touch. SERVICES are
activities that are consumed as they produced. Entrepreneurs use economic
resources to create the goods and services consumers use. Consumers satisfy
needs and wants by purchasing and consuming goods and services.
Goods are products you can purchase. A pair of shoes, a jacket, food, and cars
are all examples of goods. Services must be provided to you at the time you
need them- they cannot be stored. A haircut, a manicure, lawn mowing, and
car detailing are all examples of services.

Factors of Production
In order to create useful goods and services, an entrepreneur may use three types of economic resources. These resources are called
the factors of production and include natural resources, human resources, and capital resources.

NATURAL RESOURCES Raw materials supplied by nature are natural resources. The earth
contains oil, minerals, and the nutrients needed to grow crops and timber. Rivers, lakes, and oceans are
the sources of both food and water. All products you use begin with one or more natural resources. The
supply of many natural resources is limited. Increased use of natural resources and damage to the
environment threatens the continued availability of natural resources in many regions of the world.
Conservation practices and the production of more efficient products help to preserve and renew
resources. Compact fluorescent light bulbs (CFLs) cost more than old-style incandescent bulbs, but they
last longer, use far less electricity, save consumers’ money in the long run, and reduce greenhouse
gases. When consumers switch to CFLs, they help preserve energy resources and the environment for
future generations. One CFL keeps a half-ton of greenhouse gases (CO2) out of the atmosphere.

HUMAN RESOURCES. The people who create goods and services are called human resources.
They may work in agriculture, manufacturing, distribution, or retail businesses. They may work in
agriculture, manufacturing, distribution, or retail businesses. As an entrepreneur, you would also be a
human resource. Entrepreneurs have creative ideas and use these ideas to create a new goods and services, which in turn give
consumers more choices.

CAPITAL RESOURCES. The assets invested in the production of goods and services are called capital resources. Capital
resources include buildings, equipment, and supplies. They also include the money needed to build a factory, buy a delivery truck, and
pay the employees needed to manufacture and distribute goods and services.

Limited Resources
All economic resources have a limited supply. Most resources can be used to produce several different products and services. If
resources are used to produce one type of product, they may not be available for the production of another product. Individuals,
businesses, and countries compete for access to and ownership of economic resources.
Those resources that are in very high demand or that have limited supply with command high prices. Because there is a limited supply
will command high prices. Because there is a limited amount of natural resources, there is also be a limit to the amount of goods and
services that can be produced. Control of oil fields in the Middle East has been an ongoing issue in many years. The United States has

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large demand for oil but limited supply of oil, so it is important to the United States to have an access to oil from the Middle East. This
high demand contributes to the high gasoline prices.

Role of Entrepreneurs in the U.S. Economy

Entrepreneurs play an important role in the U.S. economy. Because all businesses that exist in the United States today began as an
entrepreneurial idea, you could say that entrepreneurs are the backbone of the U.S. economy. The development and growth of small
businesses help to ensure a strong economic future.

Supply and Demand

As business owners, entrepreneurs play an important role in supplying goods and services to meet the demands of consumers. They
look for unmet needs or better ways to satisfy consumer needs and wants. They use resources and their knowledge of markets and
business to efficiently produce goods and services that meet consumer needs and wants.

Capital Investment and Job Creation

In order to start businesses, entrepreneurs need money to finance their businesses. Sometimes they will use their own money. Other
times, they look for investors and lenders to supply them with money they need to get started. They may use the money to lease a
building, buy equipment, or hire employees. By doing so, entrepreneurs are investing in their communities by contributing to the local
economy and providing jobs.

Change Agents
Many entrepreneurs create products that change the way people live and conduct business. When you learn about American History,
you see that many entrepreneurs will always play an important role in the U.S. economy.

2.2 How Economic Decisions are made?

Economic Systems
Different economic systems exist throughout the world. However, all economies must answer three basic questions.
1. What goods and services will be produced?
2. How will the goods and services be produced?
3. What needs and wants will be satisfied with the goods and services produced?
If all economies struggle with the same basic questions, what is it that makes economies different? The type of economic system that a
country has will determine how these three economic questions are answered. Economies must choose a way to allocate, or distribute,
the goods and services that are available to the people who need or want them. These different allocation processes are what create
different economies. Different economies have different ways of choosing which goods and services are produced, which needs are
satisfied, and how many resources are used to satisfy those needs.

Command Economy
In a command economy, the government determines what, how and for whom products and services are produced. Because the
government is making the decisions, there is a little choice for consumers in what is available. The government may see no reason to
have more one type of the same item. This means individuals may not always be able to obtain exactly what they want. There will be
shirts and pants, but they may not be many styles and colors from which to choose.

Market Economy
Market economy is about personal choice. In a market economy, individuals and businesses decide what, how, and for whom goods
and services are produced. Entrepreneurship thrives in market economy. Decisions about productions and consumptions are made by
millions of people, each acting alone. Individual choice creates that market, so there are many times available that are very similar. If
good sells, it will remain in the market. If not, the good will not continue to be produced. There will be many styles of shirts and pants to
appeal to every taste, but a manufacturer will not continue to produce a style that few or no people buy.
Individual choice also exists in how items are produced. A furniture maker will make choices regarding the style, fabric, and durability of
products made. In addition, products and services are always available to everyone who has the means to pay for them.

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Traditional Economy
Before complex economic systems developed, simple economics operated according to tradition or custom. In a traditional economy,
goods and services are produced the way they have always been produced. The traditional economy is used in countries that are less
developed and are not yet participating in the global economy. Most what is produced is consumed and what is left over is sold or
traded with people who live in nearby communities. Traditional economies lack the formal structure found in more advanced economic
systems and usually have limited capital resources available to improve their conditions.

Mixed Economy
When elements of the command and market economics are combined, it is called a mixed economy. A mixed economy often results
when a country shifts away from a command economy toward a market economy but still has government involvement in the marketplace.
Many countries are making this shift. During the last decade, several European nations that used a command economy have made
progress toward creating a mixed economy. Several of these countries recently joined the European Union.
For over 70 years, the Soviet Union operated under a command economic system called communism. During this time, a series of
government-led plans directed resources toward economic growth. The government control resulted in limited choices and a shortage in
supply of many consumer goods. The Soviet Union disbanded and became 15 independent states in the early 1990s, resulting in a move
toward market economics.
China operates under a different type of communist government that controls most of the resources and decisions. The economy of
China is adopting elements of a market system for a growing number of economic decisions. China is fast becoming a world leader in
goods and services produced. A competitive educational system in China produces many skilled workers who are opening businesses
daily.
As many countries with traditional economies develop, they often adopt mixed economies. The government makes many of the decisions
about how the country’s resources will be used to develop schools, hospitals, roads, and utilities. As people become educated, they are
able to obtain jobs and earn money. Then they have the resources to purchase more goods and services. Often businesses from other
countries will begin to sell products and services in the developing country or open a business offering jobs to the citizens.

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The U.S. Economic System
What type of economic system do you think the United States has? To answer this question, you must look at who makes the most of
the decisions about what is produced and consumed. Since individual business and consumers make most of these decisions, the U.S.
system is best described as a market economy. Capitalism, which is the private ownership of resources by individuals rather than by
the government, is another name for the economic system in the United States. Another term often associated with the U.S. economy is
free enterprise, due to the freedom of businesses and individuals to make production and consumption decisions. This individual freedom
is vital to the success of the U.S. economy.
The U.S. economic system is based on four principles: private property, freedom of choice, profit, and competition.
PRIVATE PROPERTY. As a U.S. citizen, you can own, use, or dispose of things of value. You are free to own anything you want, and
you can decide what to do with it as long as you operate within the law.
FREEDOM OF CHOICE. You can make decisions independently and must accept the consequences of those decisions. Business
owners are free to choose where to open a business, what to sell, and how to operate the company. Consumers are free to choose
where to shop, what to buy, and how much they want to spend. Only when individual decisions will bring hard to others does the
government regulate freedom of choice.
PROFIT. The difference between revenues taken in by a business and the costs of operating the business is called profit. The opportunity
to earn a profit is at the heart of the free-enterprise system. One of the main reasons entrepreneurs invest resources and take risk is to
make profit. No business is guaranteed to make a profit, so entrepreneurs are challenged to work hard, invest wisely, and produce goods
and services that consumers are willing to buy.
COMPETITON. The rivalry among businesses to sell their goods and services is called competition. Consumers choose products and
services based on the value they think they will receive. Competition forces businesses to improve products, keep costs low, provide
good customer service, and search for new ideas so that consumers will choose their products or services.

Economic Choices
Individuals and businesses are faced with economic choices every day. Decisions about needs and wants must be made. Economic
decision making is the process of choosing which needs and wants, among several, you will satisfy using the resources you have.
Two factors commonly enter into economic decision making – scarcity and opportunity cost.
Scarcity
In every economy, there are limited resources to produce goods and services. However, individuals have unlimited needs and wants.
This produces the basic economic problem of scarcity. Scarcity occurs when people’s needs and wants are unlimited and the resources
to produce the goods and services to meet those needs and wants are limited. For example, land is a scarce resource. Land is used for
many purposes, such as for growing crops or as site for business or house. The same parcel of land cannot be used to meet all of these
needs. A decision on how to use it must be made. Land derives its value from its scarcity.
Decisions based on scarcity affect everyone. Individuals and families have many wants and needs. They must decide how to spread
their income among all these wants and needs. City, state, and national governments collects taxes from their citizens. They must decide
how to use the tax collections to provide all the services that citizens expect. In both cases, someone must make difficult choices.
Scarcity forces you to make choices or decisions. Suppose you work a part-time job and earns $150 a week. If you decide to purchase
a $75 concert ticket and you owe $75 for your monthly car insurance payment, you will not have any money left over to go out for pizza
with your friends. Because you have only $150, you have limited resources. With limited resources, you cannot afford to buy everything
you want. You may have to make a tradeoff by giving up something so that you can have something else.
Opportunity Cost
When trying to satisfy your wants and needs, you most likely will have many alternatives from which to choose. Economic decision
making will force you to explore all of your alternatives. The problem-solving process can be used to help you select the best and most
satisfying alternative from a set of choices. When examining all of your alternatives, you should consider the opportunity cost of each
one. Opportunity cost is the value of next-best alternative- the one you pass up. If your grandparents give you $300 for graduation, you

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have to decide what to do with it. If you decide to save the money for college, the opportunity cost would be the new iPod that you really
wanted and could have purchased with the money.
Diane Mayfield has $2,500 in extra cash that she wants to invest in her cake decorating business. Diane could use the money for
advertising or she could purchase new equipment. If she decides to use the money for advertising, she will not be able to purchase new
equipment. The opportunity cost of advertising will be the value of the new equipment – the next best alternative. Like all entrepreneurs,
Diane will have to choose between various investments options.
Functions of Business
In a market economy, an entrepreneur is free to produce and offer to consumers any legal product or service. Knowledge of business
activities will help entrepreneurs satisfy customers and make a profit. These activities or functions of business include the following:

 production
 marketing
 management
 finance
Each of these functions is dependent on the others in order for the business to be effective. Products can be produced, but if
management is not functioning properly, if adequate financial records are not maintained, or if marketing is not getting the word out to
consumers, the products probably will not be sold at a profit.
PRODUCTION. The primary reason a business exists in a market economy is to provide products or services to consumers and to
earn a profit. The production function creates or obtain products or services for sale.
MARKETING. All businesses in a market economy need to complete marketing activities in order to make their products and services
available to consumers. These activities make up the marketing mix, which includes the following:

 product
 price
 distribution
 promotion
The goal is to attract as many customers as possible so that the product succeeds in the marketplace.
MANAGEMENT It is necessary for all businesses in a market economy to spend a great deal of time developing, implementing, and
evaluating plans and activities. Setting goals can be met, and deciding how goals can be met, and deciding how to respond to the actions
of competitors is the role of management. Management also solves problems, manages the work of employees, and evaluates the
activities of the business.
FINANCE. One of the first responsibilities of finance is determining the amount of capital needed for the business and how the capital
will be obtained. The finance function also involves planning and managing the financial records of the business.

2.3 What affects price?

How much is enough?
If a market economy is based on personal choice, why does there always seem to be just enough of everything? In a market economy,
individual consumers make decisions about what to buy, and businesses make decisions about what to produce. Consumers are
motivated to buy goods and services that they need or want. Business owners are driven by the desire to earn profits. These two
groups, consumers and producers, together determine the quantities and prices of goods and services produced.
Supply and Demand
To understand how this works, you need to understand two important forces: Supply and Demand. Supply is how much of a good or
service a producer is willing to produce at different prices. Imagine that you supply car detailing services. Suppose that at a rate of $40,
you are willing to spend eight hours a week providing car detailing services. If your customers are willing to pay just $20 for a car detail,

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you might decide not to bother detailing cars at all. If, however, the rate for car detailing rose to $60, you would probably increase the
number of cars you would detail. You might even try to get some friends to help you detail even more cars.
As the price of car detailing services rises, suppliers are willing to provide more services. The
quantity of car detailing services supplied rises as the price of the car detailing services increases,
as shown on the supply curve graph.
Now consider the demand side of the market economy. Demand is an individual’s need or desire
for a product or service at a given price. Suppose that you are interested in having your car detailed.
At a rate of $40, you figure it is worth having your car detailed once a month. If, however, the rate
fell to just $20, you might be willing to have your car detailed twice a month.
As the price of the service or product decreases, consumers are willing to purchase more of the
product or service. Demand rises as the price falls, as shown on the demand curve graph.
When the demand of a product is affected by its price, this is referred by its price, this is referred to
as demand elasticity. When a change in price creates a change in demand, you have an elastic
demand. When a change in price creates very little change in demand, you have inelastic
demand. Demand is usually inelastic when

 There are no acceptable substitutes for a product that consumers need

 The change in price is small in relation to the income of the consumer, so consumers will
continue to buy the product if they want it
 The product is a basic need for consumers, rather than just a want
When Supply and Demand Meet

How do the forces of supply and demand work together to determine price in a market economy?
The point at which the supply and demand curves meet is what is known as the equilibrium price
and quantity. This is the price at which supply equals demand. Above the equilibrium price, fewer
people are interested in buying goods and services. At this point, suppliers will not be able to sell
as much of their goods or services as they would like because they have priced them too high.
Below the equilibrium price, the price is too low. Consumers would be very happy to purchase many
of the goods or services at these prices, but the suppliers would not be willing to produce enough
to meet their demand. Only at the equilibrium price does the amount consumers want to buy exactly equal the amount producers want
to supply.
Costs of Doing Business
To determine how much profit they are earning, entrepreneurs need to know how much it costs to produce their goods or services. To
do so, they much consider all the resources that go into producing the good or service to determine a price to change.
The Jewel Box, a small company that produces handmade jewelry, requires office space, materials, labor, and equipment. All of these
resources go into making a piece jewelry, and all of them must be taken into account when figuring out the price. A company that prices
its product based only on the cost of materials involved in producing it will lose money and go out of business very quickly.
Fixed and Variable Costs
Every business has fixed costs and variable costs. Fixed costs are costs that must be paid regardless of how much of a good or service
is produced. Fixed costs are also called sunk costs. Variable costs are costs that go up and down depending on the quantity of the good
or service produced.

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To understand the difference between fixed and variable costs, consider “The Bread and Bagel Shop”,
small business owned by entrepreneur Michael Miller. Whether or not customers buy his baked goods,
Michael pays the same monthly rent, the same insurance fees, and the same interests on the loans
taken out to finance his business. These are Michael’s fixed costs. He must pay them even if “The
Bread and Bagel Shop” makes no sales. The store also has variable costs, including the expenses of
buying flour, sugar, and coffee. These expenses rise directly with the number of items sold. The more
bagels, donuts, and cups of coffee the company sells, the more resources it must buy to make more
goods. In contrast, when customers purchase fewer loaves of bread, Michal uses less flour and other
ingredients.
Marginal Benefit and Marginal Cost
Entrepreneurs make business decisions based on the concepts marginal benefit and marginal cost. Marginal benefit measures the
advantages of producing one additional unit of a good or service. Marginal cost measures the disadvantages of producing one additional
unit of a good or service.
Michael Miller of “The Bread and Bagel Shop” wants to increase his sales. Michael is considering keeping the store open two extra hours
every day. He estimates that during the last two hours of every day, he will sell an additional 150 baked goods and 30 cups of coffee,
bringing in additional daily revenues of $100. This $100 represents the marginal benefit of keeping the store open an extra two hours a
day.
Should Michael stay open two extra hours each day? To figure out if staying open later makes economic sense, Michael needs to figure
out the marginal cost of staying open later. He will need to purchase additional ingredients to produce another 150 baked goods and 30
cups of coffee. He will have to pay overtime wages to at least two employees. He will also use more electricity. Adding up these costs,
Michael estimates that staying open two extra hours will cost him $125 a day. Because the marginal cost of staying open ($125) exceeds
the marginal benefit ($100), Michael decides not to change the store’s hours.

Market Structure and Prices

Market structure is determined by the nature and degree of competition among businesses that operate in the same industry. The main
criteria use to distinguish between different market structures are the number and size of sellers and buyers in the market, the type of
goods and services being traded, and the barriers to entry into the market for sellers. There are four major market structures: perfect
competition, monopolistic competition, oligopoly, and monopoly. Each market structure has an effect on the prices businesses can charge
for their products or services.
Perfect Competition
A market with perfect competition consists of a very large number of businesses producing nearly identical products and has many
buyers. Buyers are well-informed about the price, quality, and availability of products. Because consumers have so many choices of
similar products, price is often the deciding factor, making it difficult for a single business to raise prices. This gives consumers more
control of the market. Businesses can easily enter or leave this type of market. Examples of industries in perfect competition include
gasoline suppliers and producers of agricultural products such as wheat and corn.
Monopolistic Competition
A market with monopolistic competition has a large number of independent businesses that produce goods and services that are
somewhat different. Each business has a very small portion of the market share. This is also called a competitive market. In a competitive
market, many suppliers compete for business, and buyers shop around for the best deal they can find. In this kind of market, prices are
said to be determined competitively. Products offered are not identical but very similar, so differentiating products becomes very
important. Businesses can easily enter or leave a market that has monopolistic competition. Businesses in monopolistic completion
include retail stores and restaurants.
Oligopoly
When a market is dominated by a small number of businesses that gain the majority of total sales revenue, it is called oligopoly.
Businesses in this market sell similar goods and services that are close substitutes, and they have influence over the price charged. With
the dominance of a few businesses, it is not easy for new ones to enter the industry. Examples of oligopolies include the automobile and
airline industries.

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Monopoly
Where there is only one provider of a product or service, a monopoly exists. A company that has a monopoly is able to charge
whatever price is wants, because consumers have nowhere else to go to find a better price. This is the opposite of a competitive
market where consumers can simply switch to a lower-priced good or service offered by a competitor. The one provider can raise
prices up to the point where consumers will choose to simply do without the product or service. Monopolies usually exist because of
barriers that make it difficult for new businesses to enter the market. Examples of monopolies include local water and electric utility
companies.

Case Study 1: Do you want it or need it?

Case No. 2: Choose Between Alternatives

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 Case No. 3: Avoid Personal Debt

Case No. 4: Web Site Design

San Mateo Municipal College Module 2/ECF3/Page 14

College of Business and Accountancy Prepared by: Arlene F. Musones, MBA