Lesson 5 Overview

In the previous three lessons, we learned the fundamentals of supply and demand in the framework of perfect competition. In this lesson, we will begin to relax some of the assumptions of perfect competition, and see what happens in markets when some participants have what we call "market power." This will help explain what happens in some energy markets.

What will we learn?

By the end of this lesson, you should be able to:

• list and describe the assumptions that define "perfect competition;"
• understand and explain what is meant by the phrase "market power;"
• define "monopoly" and understand monopolistic behavior;
• show the differences between competitive and monopolistic equilibria;
• explain the effects of other types of market power;
• describe how we can measure market power;
• describe what a cartel is, and how it manages prices.

What is due for Lesson 5?

This lesson will take us one week to complete. Please refer to Canvas for specific time frames and due dates. There are a number of required activities in this lesson. The chart below provides an overview of those activities that must be submitted for this lesson. For assignment details, refer to the lesson page noted.