A market structure that does not satisfy the assumptions of perfect competition is regarded as the market of imperfect competition. This type of market does not operate under the rules of perfect competition. In this type of…
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Monopolistic competition along with oligopoly constitutes the structure of imperfect competition. Firms that are imperfectly competitive offer many products. The products are offered at administered prices. The price changes are costly and slower. The prime prediction of the theory of monopolistic competition is that firms will produce at the level where marginal cost equals marginal revenue in the short run. However in the long run, the firms will operate at zero profit levels and the demand curve will be tangential to the average total cost curve.
The figure shows the marginal cost curve for the monopolist (MCsm) for the short run. MCsm is the summation of the short run supply curves (SRSc) in the competitive market. The loss of producers’ surplus (area B) and consumers’ surplus (area B) arises from the profit maximizing decision of the monopolist. A monopolistically competitive firm can operate above the level of normal profit.
The above figure represents the economic loss for a monopolistically competitive firm. For a monopolistically competitive firm economic profits are zero and at equilibrium average total cost equals price. Both the firms in monopolistic competition and perfect competition are able to zero profits in the long run. It is possible for a firm operating in the monopoly market to acquire economic profits in the long run.
The price is greater than the minimum point of Average total cost curve in the long run but in perfect competition price equals minimum of average total cost. In perfect competition price is lower and output is higher than monopolistic competition.
A form of market where the industry is dominated by small number of sellers is called oligopoly. Each oligopolist is aware of the market conditions as few sellers are present in the market. The decision of one firm can influence or are influenced by other firms. The responses of the participants of the market are taken into account in
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The competitive market is therefore perfectly elastic (Mankiw, 2009). The product is always homogeneous in a competitive market, and producers have no control over price. There is perfect knowledge by all buyers and seller, and perfect mobility in all factors in the competitive market (Jain & Khanna, 2009).
The paper will analyze the market forces of the company and the associated competitive strategies. The market structure where the company operates will also be examined. Market Analysis The company has been successful in catering the customers. The businesses specialize in hiring chefs and train them to serve the purpose.
A Sony Corporation is a leading manufacturer of electric electronic gadgets all over the world such as music, online business, motion pictures, television, and computer entertainment. The organization has gained recognition throughout the world following its high awareness of products to the customers.
These market structures range from the perfect competition to monopoly, in between these two extremes are the monopolistic competition and oligopoly. Their differences may be summarized through the number of firms present in the industry, barriers to entry, their market power and the type of products they are selling (Schiller, 2006).
al, 2011). Therefore, market structure affects the market outcomes by influencing opportunities, motivations and decisions of vast industries participating in the market. The aim of market structure analysis is to isolate the effects in an attempt to predict and explain the market outcome.
Therefore the market structures of an economy can be categorized under the following types. Perfectly Competitive Market In a perfectly competitive market there are a large number of buyers and sellers and therefore the equilibrium price and quantity in the market would be determined by the combined forced of demand and supply.
As such market structure refers to the state of market or an industry with respect to competition (Market Structure 1).Market structure is important in determining the degree of competition in an industry thereby enabling us to know how this rivalry affects a customer.
In economics, market structure is the feature of a particular market in the economy. The features of a market can be organizational, competitive, or any other characteristics that define the commodity market. The yardstick that economists use in defining market structures is the pricing models and the nature of competition in a particular market.
The tradition and culture of Muslims visiting Mecca have made the city very popular despite it not allowing non-Muslims inside. Mecca is now the most cosmopolitan and diverse city in the Muslim world. The essay will focus on how the
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