The research study provided a brief introduction about the market structure and revealed the way different firms compete in the global competitive market. It revealed the way monopoly firms restrict new entrants into the market and charge high prices because they are single sellers. …
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The research explained briefly on the perfect competitive market structure and revealed some features of this market structure. It described the way firms maximize profits with the help of diagrams, the researcher revealed the way they maximize profit at the equilibrium point in both short and long run. Lastly, the conclusion summed up the discussion, and the researcher provided some significant areas for further research study. The market is structured depending on varied factors and variation that determine the market structure of a particular firm in an economy. Competition is one of the factors or conditions that determines the structure of a firm. The economists assume that there are many buyers and sellers in the marketplace; hence, they compete favorably for the available products in the market. Therefore, competition in the market contributes to changes of prices for commodities; thus creating a shift in demand and supply curve. Furthermore, there are substitute products in the marketplace; thus, when one product increases the prices, consumers chose the alternative of consuming substitute products. The buyers and sellers have the ability to influence prices for commodities, and this contributes to increased competition in the market.
The buyers and sellers may exchange property rights and everyone in the market interacts voluntarily in order to achieve self-interest. The buyers and sellers interact; thus, they signal much information about the product through product prices. Successful sellers reduce prices in order to influence buyers and out-compete their competitor (Mankiw 2011, 36). The sellers can maximize profits in case the price exceeds the products costs. Monopoly A monopoly refers to a market structure whereby only a single producer or buyer for a commodity exists. The monopoly firms are the price makers because they are single sellers in the market. Monopoly is a single business firm and it is characterized by varied features including market restrictions because of high costs and production of homogenous products. The government has powers to control or restrict entries into the market by creating barriers. The barrier to market entry may result because the firm may have exclusive rights of accessing the natural resources. For instance, the Kenya Power and Lighting Company is a monopolistic firm because the government takes control over the resources. The same case applies to Saudi Arabia oil industry because the Saudi government is the sole control of the natural oil reserves. The market also have a patent right that impede other competitors from entering into the market. The monopoly firm is classified into numerous features including perfect monopoly whereby the single seller does not have substitute products. Therefore, there is no perfect competition, but such firms are extremely rare. Another one is imperfect monopoly whereby the single seller does not have close substitute products meaning that the
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1.b Monopoly In a Monopoly market, the number of seller is one, and they produce unique goods having no competitors in the market and in this type of market the entry for the other parties or sellers is totally restricted (Velasquez, G.M., “Business Ethics: Concepts and Cases”: 167).
However, the two are interdependent in that they both examine impacts of business activities in terms of demand and supply. Microeconomics can be defined as a branch of economics which studies the behavior of individuals and the firms in making business decisions regarding resource allocation and price of goods and services.
Rival firms in an oligopoly match each other’s price cuts but do not match each other’s price increases. Competition in an oligopoly primarily takes the form of advertising and product differentiation. There are a lot of barriers to entry in an oligopoly like economies of scale, product differentiation and brand loyalty, mergers and takeovers etc (Slomon 174).
In 2008, two smart lawyers quietly bought up all the firms and began operations as a monopoly called “Wonks.” To operate efficiently, Wonks employed a management consulting company, which projected a diverse long-run competitive equilibrium. This paper is aimed at providing a descriptive and analytical structure with a critical thought regarding the acquisition of benefits by the stakeholders of the company, including the government, businesses, and consumers.
In the next year a couple of lawyers bought all the firms and started operating as monopoly with the name “Wonks”. The price of the good is determined by the interaction between supply and demand. However the supply and demand is determined by the available technology and the market conditions.
Over the time ‘money’ came into existence and was used as the medium of exchange for all the goods and services. With the rise in the commercial activities the concept of ‘market’ came into subsistence. A market is simply a place where the buyers and the sellers come in contact with each other for the exchange of products and services.
In a market setting, monopolies a thus characterized by a lack of economic competition (McKenzie& Lee, 2008). This is when, in a company’s production of goods and services, they face little if any viable substitute goods. A monopoly is a single seller in an economic setting whereby the company rises to gain monopoly with accruing the power to exclude competitors or raise prices of their commodities hence the term monopolize (Lele, 2007).
In economics, market refers to a group of buyers and sellers who involve in the transaction of commodities and services.
Perfect competition refers to a market situation where there are infinite numbers of
Evidence from the firms’ cost curves shows that the perfect competitive market is the most appropriate form of market, however market failure may occur and the paper highlights the importance of government intervention in eliminating negative externalities and the provision of public goods.