Applied SENIOR

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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Applied SENIOR
HIGH
SCHOOL
Economics

Self-Learning
Module

15
Quarter 3

Market Structures:
Monopoly and Oligopoly
Introductory Message

For the facilitator:

Welcome to the Senior High School – Applied Economics Self Learning

Module on Market Structures: Monopoly and Oligopoly!

This Self-Learning Module was collaboratively designed, developed and

reviewed by educators from the Schools Division Office of Pasig City headed by its
Officer-in-Charge Schools Division Superintendent, Ma. Evalou Concepcion A.
Agustin, in partnership with the City Government of Pasig through its mayor,
Honorable Victor Ma. Regis N. Sotto. The writers utilized the standards set by the K
to 12 Curriculum using the Most Essential Learning Competencies (MELC) in
developing this instructional resource.

This learning material hopes to engage the learners in guided and

independent learning activities at their own pace and time. Further, this also aims
to help learners acquire the needed 21st century skills especially the 5 Cs, namely:
Communication, Collaboration, Creativity, Critical Thinking, and Character while
taking into consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the
body of the module:

Notes to the Teacher

This contains helpful tips or strategies
that will help you in guiding the learners.

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:

Welcome to the Applied Economics Self Learning Module on Market

Structures: Monopoly and Oligopoly!

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.

This module has the following parts and corresponding icons:

Expectations - This points to the set of knowledge and skills

that you will learn after completing the module.

Pretest - This measures your prior knowledge about the lesson

at hand.

Recap - This part of the module provides a review of concepts

and skills that you already know about a previous lesson.

Lesson - This section discusses the topic in the module.

Activities - This is a set of activities that you need to perform.

Wrap-Up - This section summarizes the concepts and

application of the lesson.

Valuing - This part integrates a desirable moral value in the

lesson.

Posttest - This measures how much you have learned from the
entire module.
 EXPECTATIONS

After going through this module, you are expected to:

1. define monopoly and oligopoly;
2. describe the characteristics of monopoly and oligopoly; and
3. differentiate monopoly from oligopoly.

PRETEST

Directions: Read each statement carefully. Choose the letter of the best answer and
write it on a separate sheet of paper.

1. A market structure with a small number of large firms.

A. Monopoly
B. Oligopoly
C. Monopolistic Competition
D. Perfect Competition
2. A market structure where a specific person or enterprise is the only
supplier of a particular good.
A. Monopoly
B. Oligopoly
C. Monopolistic Competition
D. Perfect Competition
3. It is characterized by the profit maximizer, price maker, high barriers to
entry, single seller, and price discrimination.
A. Monopoly
B. Oligopoly
C. Monopolistic Competition
D. Perfect Competition
 4. A market structure where collusion exists.

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

Directions: Describe the monopolistic competition according to the following

characteristics.

1. Number of Sellers - _________________________________________________________

_________________________________________________________.

2. Type of products - _________________________________________________________.

_________________________________________________________

3. Entry/exit to market - ______________________________________________________

______________________________________________________.

4. Price Power - _______________________________________________________________

_______________________________________________________________.
 LESSON

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.

2. Products may be differentiated or identical, but they are usually standardized.

Sellers offer a differentiated and identical product such as petroleum which have
different variants. In an oligopoly, firms often compete on non-price competition.
This makes advertising and the quality of the product are often important.

3. In an oligopoly, there must be some barriers to entry to enable firms to gain a

significant market share. These barriers to entry may include brand loyalty or
economies of scale. However, barriers to entry are less than monopoly.

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.

Collusion is an agreement to act together or cooperatively. It is illegal, but

tacit collusion may be hard to determine. For collusion to be effective, there needs
to be barriers to entry. A cartel is a formal collusive agreement. For example, the
Organization of Petroleum Exporting Countries (OPEC) is a cartel seeking to control
the price of oil.
Monopoly
A monopoly exists when a company and its product offerings dominate a
sector or industry. The existence of a monopoly depends on how easy it is for
consumers to substitute the products for those of other sellers.

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

Activity 1: Describe the Market

Directions: Differentiate monopoly from oligopoly. Provide your answer in the table
below.

Market Number of Type of Entry/Exit to Price Power

Structure Seller Product Market
1. Oligopoly
2. Monopoly

Activity 2: Market Structure

Directions: Illustrate at least 3 companies that are oligopoly and monopoly. You
may use the space below.

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!

“Nobody has a monopoly on good ideas” – Kevin O’Leary

POSTTEST

Directions: Read each statement carefully. Write T if the statement is correct,

otherwise write F.

____________1. Monopoly has no close substitute goods available.

____________2. Independent pricing decisions made by an oligopolistic firm on a

regular basis that results in industry-wide prices.

____________3. It is easy to enter in a monopoly market.

____________4. Organization of Petroleum Exporting Countries (OPEC) is an

example of cartel.

____________5. Collusion is permitted by the government.

 KEY TO CORRECTION

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.

Boundless. "Boundless Economics." Lumen. Accessed July 30, 2020.

https://courses.lumenlearning.com/boundless-
economics/chapter/introduction-to-monopoly/.

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.

""Nobody Has a Monopoly on Good Ideas." #marketing #quotes #Kreatepop:

Leadership Quote, Marketing Quotes, Be Yourself Quotes." Pinterest.
Accessed July 30, 2020.
https://www.pinterest.ph/pin/414894184394117502/.

Pettinger, Tejvan. "Oligopoly." Economics Help. November 26, 2019. Accessed July
30, 2020.
https://www.economicshelp.org/microessays/markets/oligopoly/.

Young, Julie. "Dynamics and Unfair Advantages of Collusion." Investopedia.

January 29, 2020. Accessed July 30, 2020.
https://www.investopedia.com/terms/c/collusion.asp#:~:text=Collusion is a
non-competitive,gain an unfair market advantage.