ECON 2302 Unit 4


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Unit 4: Monopolies and Monopolistic Competition



A.  Read the following selection from the Margin Notes by clicking on the link.


B.  Watch these presentations. When you click on one of the links below, a new screen will pop up. Use the scrollbar on the side of the new screen to navigate. You need Adobe Reader to view PDF files.


C.  (Optional) Read the following chapter from the textbook.

Chapter 09


D.  The following Optional Links will help you do better in your course but they are not required.


E.  Activity #3: Analyzing Wal-Mart (10 points)To Do Note

For Activity #3, we're going to watch a documentary about Wal-Mart stores and their success.



Go to the website of Frontline's Is Wal-Mart Good for America? From the left side of the page choose the Introduction link and read through that page. You are welcome but not required to follow the links embedded in the text. Return to the original page and explore the following links from below the Introduction link.

The Secrets of Wal-Mart's Success
Transforming America
The China Connection

Each of those pages has a number of links to fascinating background information on the Wal-Mart story. You're not required to read everything linked on all three pages but you need to at least skim through as many as possible. They're all interesting and the more you know, the better.

For fun, try Wal-Mart's Woman Problem and Wal-Mart's Discounted Ethics.



From the right side of the Frontline page, follow the link to Watch the Full Program Online. Read through the brief introduction on that page. To watch the documentary, you will need Windows Media or Real Player. If you don't have either, you can download the player of your choice for free by clicking on one of the links at the bottom of the Unit 1 page. The documentary is just under 60 minutes in length but has been divided into 5 "chapters" for viewing. The chapters are accessed by clicking on the picture for each, either with the cable/dsl link or the 56k modem link. (If you have technical difficulties, the FAQ pages may be of some use.)

You should be able to watch the documentary on any but the oldest and slowest computers. If you have problems, you can download the transcript for free. Reading rather than seeing won't have the same impact but if it's your only choice, I certainly understand.

As you watch the documentary, consider the following questions. (Do NOT send me the answers to these ... they're only to help you stay focused during the documentary.)

What did you notice at the Wal-Mart shareholders meeting? Do you think this is different from other shareholders' meetings? If yes, in what ways?

How is Wal-Mart able to keep track of its inventory? Why is this important? List the effects this has on producers.

Trace the decline of Rubbermaid from 1994 to 2004. What factors most contributed to this decline?

What is an opening price point? How does it influence sales?

Wal-Mart started a campaign encouraging people to buy products that were made in America. What influence did this have on Wal-Mart's buying practices? Be specific!

In 1994, President Clinton said that new trade agreements would create a market for American products in China. What happened to US companies after opening trade with China? Look at the statistics, companies and places.

List the arguments in favor of outsourcing and those that are against it.

Compare the situation at Five Rivers Electronics and the Thomson Plant. What caused problems and what was the result for each?

Be familiar with the following terms.

Outsourcing is when a business obtains services or products used in manufacturing, such as parts for a television set, from an outside (often overseas) supplier or manufacturer in order to cut costs.

Offshore Companies conduct most of their business outside of the country in which they are incorporated. These companies are also known as non-resident companies.

Push Production is when manufacturers of products decide what to produce, how much to produce and the price of the product.

Pull Production is when retailers determine what the manufacturer will produce, how much to produce and the price of the product.


Critical Thinking

ADAM SMITHFree-market economist Adam Smith (1723-1790) stated that “it is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest.” What this implies is that if they do not make a profit, they will not supply meat, drink or bread because they would not benefit. According to Smith, someone earning money by his own labor benefits himself. Unknowingly, he also benefits society, because to earn income on his labor in a competitive market, he must produce something others value. This concept is at the core of a competitive capitalist economy and we Americans love capitalism. Wal-Mart has proven its genius at competition ... its system allows it to sell products at a price most competitors cannot meet and still make a profit. So why have we capitalists begun to be so critical of Wal-Mart's competitive success? What's wrong with this picture?

  1. After you've covered the assignment material, I'd like you to send me an essay that answers the question in the documentary's title -- Is Wal-Mart Good for America? Your answer to that question may be as long or as brief as you want but it must pass two tests.

  2. First, your answer must exhibit an understanding of economic concepts. Make specific and detailed connections to course content.

  3. Second, your answer must reflect the information given in the assignment, both from the video and readings and from the information on Adam Smith. Use what you learned from the assignment to make your case. Too, while I welcome you to include your opinions as part of your comments, those opinions must have some basis in fact. This is the time to demonstrate some critical thinking!

  4. Please be careful to use correct spelling & grammar.


Activity Submission Instructions

By the deadline shown in the Course Schedule on the main page of the syllabus:
  • Send your comments in the body of a new email to

  • Put only your name and Activity #3 at the beginning of your email.

  • Be careful to use the correct subject line.

  • Late comments will lose one point per day late, including weekends and holidays.



Copyright 1996 Amy S Glenn
Last updated:   02/14/2018   0130

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