DSE Economics: Market Structure — Tutor Lesson Plan (competition, monopoly, oligopoly)

2026-10-27

Tutor lesson-prep guides · Secondary economics

Students remember that competition has many firms but cannot say why a monopolist sets prices. One question decides it: is the firm a price taker or a price maker?

Objectives — the student can classify markets using four features, decide whether a firm takes or sets price, and explain the causes and costs of monopoly.

01 Prerequisites (3-minute check)

If any of these fails, fix it before the lesson starts.

Skill	Quick check	Pass mark
Demand and supply	What sets the equilibrium price?	The crossing of the curves
Costs	Fixed against variable cost	Whether it changes with output
Examples	Name a near-competitive market	A wet market stall

02 Lesson flow (60 minutes)

Time	Stage	Tutor does	Student does
0-10 min	Four features	Number of firms, product, entry, pricing power	Fill a table
10-26 min	Perfect competition	Price taker, zero long-run profit	Explain two outcomes
26-42 min	Monopoly	Single firm, price maker, barriers	Give three causes
42-54 min	Oligopoly and efficiency	Few firms, interdependence, deadweight loss	Analyse a case
54-57 min	Format	Classify, then features, then effects	Rewrite one
57-60 min	Exit check	Three questions marked	Finish alone

03 Teaching script (read it out)

Scene 1: Four features sort three markets

Number of firms, product differences, entry barriers and pricing power.
Perfect competition: many, identical, free entry, price taker.
Monopoly: one, unique, high barriers, price maker. Oligopoly: a few.

Student ranks the three by pricing power.

Scene 2: Competition drives long-run profit to normal

Profit attracts entrants, supply rises, price falls and profit disappears.
Long-run economic profit is therefore zero, which is what free entry means.

Student predicts what changes if entry is restricted.

Scene 3: Monopoly: causes and costs

Causes: patents, economies of scale, licences, control of inputs.
Costs: lower output, higher price and a deadweight loss.
Benefits: scale economies and research incentives.

Note: a one-sided answer rarely scores full marks.

04 Question types and worked steps

Type	Example	Steps	Answer
Classify	a single electricity supplier	One firm, high barriers	Monopoly
Pricing power	a wet market stall	Price taker	Cannot set price
Long-run profit	perfect competition	Free entry and exit	Normal profit only
Efficiency	monopoly output	Below the social optimum	Deadweight loss

Sanity check (teach this): Pricing power must match entry barriers: a price maker cannot also face free entry.

05 Independent practice (3 questions)

Question	Answer	What to watch
A single electricity supplier	Monopoly	One firm with barriers
Long-run economic profit under competition	Zero	Free entry
Why monopoly output is lower	Profit maximising at a higher price	Downward demand curve

06 Common mistakes and what to say

Mistake	Student writes	Say this
Oligopoly called monopoly	a few firms described as one	Few firms with interdependence.
Normal and economic profit mixed	zero economic profit means closure	Normal profit remains.
Only costs of monopoly	omits scale economies	Give both sides.
Feature contradicting the conclusion	price taker said to set price	Classify first.

07 Homework (paper, section and question numbers)

Secondary economics chapter index — Use the three questions on this page

08 Exit check (last 5 minutes)

Question	Answer	Decision
Single electricity supplier	Monopoly	All right: move to national income
Long-run economic profit in competition	Zero	One wrong: re-teach features
Why monopoly output is lower	Profit maximising price is higher	Two wrong: repeat scene 3

09 Tutor FAQ

Which structure fits Hong Kong?

Oligopoly in telecoms and supermarkets.

Do they need diagrams?

Yes; the monopoly diagram shows output and price fastest.

Link to demand and supply?

A competitive firm faces a horizontal demand line.

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A TutorZone lesson-prep guide. Written by the TutorZone team; questions and lesson flow are original and are not taken from any school or publisher material.