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Teaching Market Structures with a Competitive Gum Market

In this lesson, students participate in an activity that demonstrates a key economic idea: The level of competition in an industry is a major determinant of product prices. Students are placed in groups that replicate four competitive conditions—perfect competition, monopoly, competitive oligopoly, and collusive oligopoly. Students act as firms in each industry competing to sell their product to the teacher (acting as a consumer). Through the market activity, students learn that when many firms are competing in an industry, prices begin to reflect the cost of production, whereas a single seller can command a high price. They also learn how collusion can result in groups of sellers behaving as monopolists.

•  Lesson (pdf)

•  PowerPoint (pptx)

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Audience:   High School, College
Language:   English
Subjects:   AP Economics, Economics
Resource Types:   Lessons, PowerPoint
Concepts:   Markets, Market Structure, Incentives