Learning activity

To play the following simulation take the following steps:

1. Divide your class into various businesses which reflects the number of firms within each industry e.g. assign one of your students to be a monopoly, 3 play the role of an oligopoly, 4 to play the role of monopolistic firms and the rest can represent perfectly competitive firms.

2. Provide each student with either a piece of chocolate or other candy.  The types of chocolate provided to each market structure can be different but the students representing firms in perfect competition must all be given the same piece of candy, to represent the homogenous products in that structure.

3. Inform the class that you as the consumer will purchase one piece of chocolate from each market type at a price of between 0.20 c and $1.  Each student then decides on how much they will sell their sweet for and writes this down on a small piece of paper.  Neither the monopolistic or perfectly competitive firms can speak to each other, to agree to a collective price.  The oligopolistic firms can do this.

4. Go round to each of the 4 market structures and purchase one of the pieces of candy for the cheapest price available.  The firm representing a monopoly may as well charge the full $1, since there is no competition and you have already declared that you are committed to purchasing from every structure.

5. Discuss this activity with your students - what did they learn from this exercise?  Questions that may be discussed might be - why could the smaller firms not speak to each other?  What is to stop the firms in oligopoly cheating on the agreed deal?

6. Read out some of the characteristics of the 4 market structures and have your classes assign each to the classroom simulation they had just played.