Economical Markets Paper - Essay Example

Monopoly is an economic structure where there one participant which controls the marketplace. . In such a market the firm realizing business controls the price, but it is not immune to the law of demand and supply. The price is set at the quantity and price point which maximizes profit for a company.. The market demand is downward sloping, but the difference is that in order to maximize profits price is not part of the equation and the formula is determined by the following equation, MR=MC. An example of an intangible asset which allows the formation of a monopoly in Parkersburg is Water – City of Parkersburg Utility.

The company is the only firm that produces water within the region, thus they are monopoly. Utility monopolies are at times received governmental incentives so that the basic utility services such as water and electricity become cheaper for the people living below the poverty. Another economic market structure is monopolistic competition. Monopolistic competition is a market structure in which there are lots of competitors and the players utilized differentiation in order to bring uniqueness to their produce offer discrepancies among similar products.

In order to effectively compete in such a market it is important to differentiate the product. This can be accomplished though expert advertising, innovation or better production methods. The market demand curve in monopolistic competition slopes downward, thus the equation to maximize profits is MR=MC. Graphically to determine the price for this output the economist extends the quantity line to the demand curve. In Virginia a company that operates in monopolistic market structure is Dairy Queen Brazier.

Dairy Queen is a company in the fast food industry which delivers a product that is unique for the industry. The offers classic burgers and hotdogs, but the company also offers gourmet dairy product such as fresh bread,