Applied Economics Q3 Module 13
Applied Economics Q3 Module 13
Applied Economics Q3 Module 13
HIGH
Economics SCHOOL
Self-Learning
Module
Market Structure:
13
Perfect Competition
666
Quarter 3
Applied Economics
Quarter 3 – Self-Learning Module 13: Market Structure: Perfect Competition
First Edition, 2020
Republic Act 8293, Section 176 states that no copyright shall subsist in
any work of the Government of the Philippines. However, prior approval of the
government agency or office wherein the work is created shall be necessary for
exploitation of such work for profit. Such agency or office may, among other things,
impose as a condition the payment of royalties.
Self-Learning
Module
13
Quarter 3
Market Structure:
Perfect Competition
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. Seller
B. Buyer
C. Market demand and supply
D. None of the above
5. A price maker in the perfect competition.
A. Seller
B. Buyer
C. Market demand and supply
D. None of the above
RECAP
Directions: Define the following terms. Write your answer in the space provided.
1. Elasticity-_____________________________________________________________________
______________________________________________________________________________.
2. Inelastic- _____________________________________________________________________
______________________________________________________________________________.
3. Elastic- ______________________________________________________________________
______________________________________________________________________________.
4. Price Elasticity-________________________________________________________________
______________________________________________________________________________.
5. Income Elasticity-_____________________________________________________________
______________________________________________________________________________.
LESSON
We have learned that the interaction of sellers and buyers is one of the
concerns in microeconomics. Hence, as a business student, you have to
understand the behavior of these players in the market. We define “market” as a
place where buyers and sellers can meet to facilitate the exchange or transaction of
goods and services (Kenton, 2020). Market offers various products, however, not all
products are available in a single market. The type of products available varies on
the market structure. Market structure refers to the competitive environment in
which buyers and sellers operate. The degree of competition, it is rivalry among
various sellers in the market, differs from the characteristics of the market. It
depends on the number and size of buyers and sellers, type of product bought and
sold, degree of mobility of resources, entry and exit of firms, and pricing powers.
This module will help you understand one of the market structures which is
the perfect competition.
1. There are so many buyers and sellers that each has a negligible impact on
market price. The change in the output of a single firm will not noticeably affect the
market price of the good. Likewise, there is no single buyer who can influence the
price since the consumer purchases only a small amount or in retail.
2. The products sold in the market are homogenous. It means that the products are
highly similar in such a way consumers have no preference to buy from the other
seller. The goods offered for sale are all the same. For example, the salt is the same
rock salt that the other store sells. Most of the products sell in perfect competition
are agricultural products.
5. The firms can easily enter or exit from the market because there are no
significant barriers or special costs to discourage the new entrants. Likewise, there
are no barriers that will prevent sellers from exiting the market. Hence, firms need
less capital to enter in the market.
ACTIVITIES
To summarize what you have learned in the lesson, answer the following
questions:
1. What is perfect competition?
2. What are the characteristics of perfect competition?
3. Who determines the price in perfect competition?
VALUING
Reflect on this!
“I have been up against tough competition all my life. I wouldn’t know how to get
along without it” – Walt Disney
POSTTEST
____________1. There are no barriers to entry into or exit out of the market in a
perfect competition.
KEY TO CORRECTION
POSTTEST:
1. T
2. F
3. T
4. F
5. T
5. C
4. A
3. C
2. C
1. A
PRETEST
References
Dinio, R. and Villalis, G. Applied Economics. Rex Book Store, Inc. Sampaloc,
Manila, 2017.
Kenton, Will. "What Everyone Should Know About Markets." Investopedia. April 07,
2020. Accessed July 28, 2020.
https://www.investopedia.com/terms/m/market.asp#:~:text=A market is a
place where buyers and sellers can,transaction of goods and services.
"Perfect Competition." Economics Online. January 20, 2020. Accessed July 28,
2020.https://www.economicsonline.co.uk/Business_economics/Perfect_co
mpetition.html.
"TOP 19 TOUGH COMPETITION QUOTES: A-Z Quotes." A. Accessed July 28, 2020.
https://www.azquotes.com/quotes/topics/tough-competition.html.