TEKS 113.31(d)(8), Social Studies (Economics)

Subject: Economics – High School
TEKS 113.31(d)(8)

Summary of TEKS 113.31(d)(8)

TEKS 113.31(d)(8) explains the characteristics of pure competition, monopolistic competition, oligopoly, and monopoly. It also highlights the role of government in regulating these market structures to ensure fairness and protect consumers.

Key Concepts of TEKS 113.31(d)(8)

1. Pure Competition: Many small businesses selling identical products (e.g., farming).
2. Monopolistic Competition: Many businesses selling similar but unique products (e.g., fast food).
3. Oligopoly: A few large businesses dominating a market (e.g., smartphones).
4. Monopoly: One business controlling the market, often regulated (e.g., utilities).
5. Government Regulations: Laws to prevent unfair practices, ensure competition, and protect consumers.

Section 1: What Are the Types of Market Structures?

TEKS 113.31(d)(8)(A)

Explanation: Market structures describe how businesses compete to sell goods and services. Let’s explore the four main types:

1. Pure Competition

• Characteristics:
  • Many small businesses sell identical products.
  • No single business can control the price.
  • Buyers and sellers have complete information about the market.
• Examples:
  • Farmers selling wheat or corn.
  • Fishermen selling the same type of fish at a market.

2. Monopolistic Competition

• Characteristics:
  • Many businesses sell similar but slightly different products.
  • Companies compete by using advertising and brand loyalty.
  • Prices are influenced by both competition and customer preferences.
• Examples:
  • Fast food restaurants like McDonald’s and Burger King.
  • Clothing brands like Nike and Adidas.

3. Oligopoly

• Characteristics:
  • A few large businesses dominate the market.
  • Companies may cooperate to control prices (illegal collusion) or compete aggressively.
  • Hard for new businesses to enter the market.
• Examples:
  • Smartphone companies like Apple and Samsung.
  • Airlines like Delta, American, and United.

4. Monopoly

• Characteristics:
  • One business controls the entire market.
  • No competition exists, so the business sets prices.
  • Often regulated by the government to prevent abuse of power.
• Examples:
  • Local utility companies providing water or electricity.
  • Patented products like a new medication.

Key Idea: Each market structure has unique characteristics that influence competition and pricing.

Section 2: How Does the Government Regulate Market Structures?

TEKS 113.31(d)(8)(B)

Explanation: The government uses regulations to ensure fair competition and protect consumers in different market structures.

Pure Competition and Monopolistic Competition

• Regulations:
  • Antitrust laws prevent businesses from forming monopolies or engaging in unfair practices.
  • Consumer protection laws ensure accurate information about products.
• Example: A cereal company can’t falsely advertise that their product cures illnesses.

Oligopoly

• Regulations:
  • Prevent collusion where companies secretly agree to fix prices.
  • Monitor mergers to ensure no single company dominates the market.
• Example: The government blocked a proposed merger between two major airlines to keep competition alive.

Monopoly

• Regulations:
  • Natural monopolies like water or electricity are allowed but heavily monitored to prevent high prices or poor service.
  • Patents are temporary to encourage innovation but eventually expire to promote competition.
• Example: A utility company must follow rules set by the government to ensure fair pricing for customers.

Key Idea: Government regulations protect consumers by promoting fair competition and preventing businesses from abusing power.

Related Videos