Market Structures
Unit 2 · Lesson 2.13 · Last updated June 2026
A 45-minute lesson where students analyze firm scenarios to discover the four market structures, compare levels of competition and market power across each, and consolidate their understanding through a sorting puzzle.
Overview
In this lesson, students describe examples of market failures and are introduced to four market structures and the differing degrees of competition within each.
Learning Objectives
- Explain how a market can sometimes fail to produce an efficient outcome.
- Identify four market structures and compare the outcomes for consumers and firms in each.
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Materials
- Instruction Slides (display during class period)
- Firm Scenarios pp. 4–7 (1 scenario per pair of students)
- Student Handout pp. 8–9 (1 copy per student)
- Market Structure Puzzle pp. 10–11 (class set — 1 copy cut into 32 cards per pair)
OR - Digital Market Structure Puzzle (make a copy and enable editing access for each pair)
- Laptop or tablet (1 per pair of students, if using the digital puzzle)
Lesson Sequence
Slides 2–8
- Display Slide 2. Distribute Firm Scenarios (1 scenario per pair). Allow students 3 minutes to respond to prompts 1–3 on their scenario. (Additional educator tips and suggested answers are in the notes section throughout Instruction Slides.) Note: The extent to which a firm faces competition, controls price, and spends on advertising can be debated — Firm Scenarios is designed to let students grapple with the spectrum of firm characteristics and leave room for discussion.
- Proceed to Slide 3. Call on a partnership with Scenario 1 to read it aloud. Discuss how the firm in Scenario 1 would respond to the discussion questions. Click to demonstrate where the Scenario 1 firm falls on the spectrum.
- Using Slides 4–6, repeat Step 2 for Scenarios 2–4. Highlight for students that they have just identified four different market structures and the basic characteristics of each.
- Display Slide 7 and explain that this lesson explores situations when markets do not function perfectly due to a lack of competition. Proceed to Slide 8 and introduce the learning objectives.
Slides 9–37
- Advance through Slides 9–10. Distribute 1 copy of Student Handout to each student. Click to explain that the lesson now addresses markets with varying levels of competition. Students add notes and drawings to the "Additional Notes, Drawings, and Examples" section of Student Handout throughout the lesson.
- Proceed to Slide 11. Students draw four faces in the left margin of Student Handout to represent their current comfort level with each market structure. They will return to these faces in the Summarizer to reflect on how their thinking has changed.
- Display Slide 12. Define market power and explain that the four Firm Scenarios represented firms with varying levels of market power.
- Proceed to Slide 13. Students rank the four scenarios on Student Handout from least to most market power and review the answers. (Suggested answers are in the notes section of Instruction Slides.)
- Display Slide 14. Define perfect competition and give possible examples.
- Proceed to Slide 15. Click to reveal and explain the characteristics of perfect competition.
- Display Slide 16. Click to reveal and describe why perfect competition is rare.
- Proceed to Slide 17. Click to explain why perfect competition is a useful model to understand despite its rarity. Encourage students to add notes to Student Handout.
- Using Slides 18–19, repeat Steps 9–10 for monopolistic competition.
- Display Slide 20. Introduce counterexamples of monopolistic competition and explain why they do not satisfy the characteristics of monopolistic competition.
- Advance to Slide 21. Allow 1 minute for pairs to generate as many examples of monopolistic competition as possible.
- Proceed to Slide 22. Provide additional examples. Students add notes to Student Handout.
- Display Slide 23. Students discuss the prompt with a partner.
- Proceed to Slide 24. Explain why firms in monopolistic competition rely heavily on advertising.
- Using Slides 25–26, repeat Steps 9–10 for oligopoly. Highlight the role of the interdependence principle in the decision-making process of oligopolistic firms.
- Display Slide 27. Click to define collusion and explain why collusion and cartels are often associated with oligopolies.
- Using Slides 28–30, repeat Steps 14–16 for oligopoly.
- Using Slides 31–32, repeat Steps 9–10 for monopoly.
- Proceed to Slide 33. Alert students to the stumbling block (as indicated by the yellow warning graphic): although monopolies are price makers, they are still subject to the law of demand.
- Using Slides 34–36, repeat Steps 14–16 for monopoly.
- Proceed to Slide 37. Students discuss the questions with a partner and then as a class.
Slides 38–41
- Progress through Slides 38–39. Allow students to review the faces they drew in Step 6 and reflect on how their comfort level with market structures has changed.
- Display Slide 40. Explain that students will work with a partner to sort the four market structure cards from least to greatest competition (left to right) and organize the remaining cards under the appropriate market structure (see Slide 41 for the key). Allow 5 minutes. Tell students to put their notes away.
- Physical puzzle: distribute 1 Market Structure Puzzle set to each pair.
- Digital puzzle: direct each pair to get a device, assign a slide number, and send the link to Digital Market Structure Puzzle.
- After 5 minutes, proceed to Slide 41 to display the puzzle key. Discuss any areas of confusion. If students used the physical puzzle, collect puzzle materials.
Aligned Standards
Voluntary National Content Standards in Economics
Standard 5 Business Decisions and Market Structure
Standard 6 Market Failure
Standard 7 Role of Government
What Educators Are Saying
I really liked how this lesson starts with the discussion around the different scenarios and then how that exposes students to the market structures. My students really got into the beginning and appreciated the ability to discuss and debate how they approached the different levels of price control, advertising, and competition.
High School Economics Teacher, Connecticut
Slide 10 sparked a great conversation in my classroom... I found the check-for-understanding slides incredibly helpful to check for understanding of the learning objectives.
High School Economics Teacher, Indiana
I am absolutely impressed by the quality of work you guys continually put out there!
High School Economics Teacher, Indiana