...The Many Aspects of Market Structures Denise Plumb ECO204 – Principles of Microeconomics Instructor Phelicia Price February 1, 2015 I would first like to thank the mayor for the opportunity to provide the answers to the important questions that will help assist with the understanding of the different market structures of the businesses in the city. Hopefully with a deeper understanding of market structures and how they work, the mayor will be able to provide better insight on what will work best for his/her city. In order for us to understand the relationships between consumers and businesses, we must clearly understand the different characteristics of each market structure; these market structures include Perfect Competition, Monopolistic Competition, Oligopoly and Monopoly. The first market structure that we will discuss is perfect competition. Perfect competition is a theory that is composed of six assumptions that if a market meets all six assumptions, then the market can be considered as a perfectly competitive environment and no individual or company has power to manipulate the market in their favor or increase the price of the item or service. “Perfect competition, neutralizes these strategic behaviors and conflictual interactions, resulting in the elimination of these distributions conflicts…perfect competition (associated with constant returns) dissolves these conflicts of appropriation since every individual can...
Words: 2116 - Pages: 9
...Potato Chip Monopoly ECO204: Principles of Microeconomics A monopoly is an industry composed of only one firm that produces a product for which there are no close substitutions and in which significant barriers exist to prevent new firms from entering into the industry (Case, 2009). In a different definition, it can be distinguished by a lack of financially viable competition to produce the goods or services as well as to substitute goods. Monopolies often refer to a procedure by which a company could gain a determinedly larger market than what would be expected under an ideal competition. This paper will emphasize on several components such as how a monopoly can benefit towards stakeholders or owners. Also, how the changes could take place according to price and output of the goods and services in a particular market place and how the market structure can be beneficial to the Wonks potato chip monopoly. This paper addresses a particular incident regarding a company called “Wonk” that produced potato chips. In 2008, two lawyers started acquiring aggressive potato chip firms with the plan to create a monopoly firm ‘Wonk’. From this perspective, those lawyers hired a consulting firm to manage and estimate the long-run competitive stability of this firm as monopoly. Again, with rule of marketplace a monopoly is a company which produces goods and services for which there no substitution in that particular area to compete for those certain products or services and prohibits...
Words: 1754 - Pages: 8
...Market Overview of Caruthersville Jeffrey Tarpley ECO204: Principles of Microeconomics Nicholas Bergan October 7, 2013 Market Overview of Caruthersville Jeffrey Tarpley ECO204: Principles of Microeconomics Nicholas Bergan October 7, 2013 The town of Caruthersville Missouri has a diversified market structure on the local level. It has some businesses that supply products on a national level and even on the international level. The objective is to find what is presently here and what can be done to improve the business environment in Caruthersville. Lets begin by looking at the types of market structures. A large number of buyers and sellers, ease of entry and exit in the industry, perfect knowledge, and mobility of resources characterize perfect competition market. (Amacher & Pate, 2013, p. 9.1) A market structure that has only one seller of a product with no close substitutes is considered a monopoly. Many firms selling differentiated products with easy entry and exit in the industry are called monopolistic competition. A few firms competing with mutual interdependence in the market is called oligopoly. The structure called oligopoly is sometimes viewed as a shared monopoly. (Amacher & Pate, 2013, p. 11.4) Internet providers would fall into this category; they seem to offer the same service at relatively the same price level. There seems to be obstacles of government regulations and licensing that help to deter new competition from entering...
Words: 1662 - Pages: 7
...“Fat” Tax On Pop Soda Analysis Economic Analysis of the impact of policy Course: Microeconomic Theories (Eco204) The Group of Eight (Canada, France, Germany, Italy, Japan, Russia, the UK and the US) generated almost $291 billion in soft drinks sales in 2010, according to Market Line. Pop soda has been such an important good in people’s everyday life and it generates huge revenue for the whole economy. It is reasonable to believe that the government’s new proposal of imposing a 1% “fat” tax on pop soda sold in the market will lead to some remarkable effects on both the supermarkets and consumers. In my opinion, the “fat” tax proposal is not a good choice for the government. By doing calculations and analysis based on current market demand, we can get the current revenue-maximizing average price per ounce of soda sold per week in the supermarket chain, the optimal quantity and the maximum revenue. They are 0.017 dollars, 29469 ounces, and 502.05 dollars respectively. However, after the 1% “fat” tax, the situation changes. First of all, no matter who is paying the tax, whether the consumers or the suppliers, prices will be driven up. If consumers are the ones to pay for it, the tax amount will be added directly to the soda prices, and if it is the other way around the amount will be indirectly reflected on the soda prices. Secondly, since pop soda is reasonably considered to have many substitutes, for instance water, tea, coffee etc., its increasing price will lead to...
Words: 679 - Pages: 3
...ECO204-Principles of Microeconomics Ashford University Prof. Evelyn Bolden Supply and Demand Curves Do you agree or disagree with each of the following statements? Briefly explain your answers. 1. The price of a good rises, causing the demand for another good to fall. The goods are therefore substitutes. Substitute goods are those that can be used in place on one another -- Pepsi and Coke, for example. Substitutes are different goods that compete with the one under consideration. Therefore is the price of Pepsi goes up, it caused for Coke to increase its demand not fall. As a result, I disagree with the above statement. Increase in the price of a complement for X P Q 2. A shift in supply causes the price of a good to fall. The shift must have been an increase in supply. I agree with the above statement, because a change in supply affects the price and quantity of the product. a. An increase in supply (a shift rightward of the supply curve) causes the price to fall and the quantity to increase. b. A decrease in supply (a shift leftward in the supply curve) causes the price to rise and the quantity to decrease. 3. During 2007, incomes rose sharply for most Americans. This change would likely lead to an increase in the prices of both normal and inferior goods. When individuals have more income, they are normally more likely to purchase a good at...
Words: 1015 - Pages: 5
...Final Paper Name. ECO204: Principles of Microeconomics Professor date Final Paper In 2008, two lawyers began purchasing competitive potato chip firms with the goal to form a monopoly firm called “Wonks”. After purchase of these firms, the two lawyers then hired a management consulting firm to estimate the long-run competitive equilibrium of this new monopoly. The following paper will discuss the benefits of this new monopoly towards stakeholders involved, the changes that may occur in price and output of the product in this particular market structure; and market structure that will most benefit the Wonks potato chip monopoly. A monopoly is defined as a firm that produces a product for which there are no close substitutes and in which significant barriers exist to prevent new firms from entering the industry. By purchasing all firms involved with the potato chip industry the two lawyers created a pure monopoly. A pure monopoly would allow the two firm owners to control the whole industry. By seizing control of the market, the firm would now control their position on the market demand curve. They control everything from output quantity, to price point and their only limit to production would be cost of production. When a firm controls there position on the demand curve, the firm has over all power as to what and how much product is produced...
Words: 1362 - Pages: 6
...Monopoly Erinn Copeland ECO204: Principles of Microeconomics (BQC1232A) Instructor: Melvin Landry September 10, 2012 Monopoly Monopolies in the business world exist because dominating companies create obstacles that impede smaller companies from having an impact on the market. Monopolies are defined formally "as one firm within an industry that produces a product for which there are no close substitutes and in which significant barriers exist to prevent new firms from entering the industry” (Case, Fair, & Oster, 2009, pg. 254). When operating within an industry where entry into that industry is easy, a company has some market power because the product they are offering is the norm; however, when operating as a monopoly, companies dominate the market because their distinctive product carries more market power. Is it more beneficial for a company to operate as a monopoly or is it more beneficial for a company to share market power with other companies within their industry? Monopolies have stakeholders such as other businesses in their industry and consumers, which are affected by how they dominate an industry. How effective is a monopoly for the stakeholders within that company? Companies that operate as a monopoly do so because there are benefits to operating this way. In 2007, the potato chip industry in the Northwest was competitively structured and in long-run competitive equilibrium; firms were earning a normal rate of return and were competing in a monopolistically...
Words: 1810 - Pages: 8
...Wonks Potato Chip Industry Misti Hubbard ECO204: Principles of Microeconomics Instructor: Susan Didriksen Friday, August 03, 2012 In this essay I will be covering the benefits of the new monopoly, and the changes which will occur in price and output of the product in this particular type of market structure; and market structure that will most benefit the Wonks potato chip industry. The potato chip industry in the northwest was running in competitive equilibrium in 2007. In 2008 two lawyers quietly bought all the firms and created a monopolistic company called “Wonks” in order for Wonks to operate efficiently, Wonk’s had to hire a management consulting firm which then estimated a different long-run competitive equilibrium. Economist divided the market conditions into four major categories: (1) monopoly, (2) pure competition, (3) monopolistic competitive, (4) oligopoly. In a monopoly, a single business or company supplies a product and or service for which buyers cannot find a substitute. A Monopoly may arise when one company can supply a given commodity more cheaply than two more companies can. Our textbook defines a monopoly as “an industry composed of only once firm that produces a product for which there are no close substitutes and in which significant barriers exist to prevent new firms from entering the industry” (Case, 2009). By purchasing all firms involved with the potato chip industry the two lawyers have created a pure monopoly. A pure monopoly...
Words: 1288 - Pages: 6
...Economic growth and Small Countries Kathy Brophy ECO204: Principles of Microeconomics November 21, 2010 Phelicia Price Economic growth and Small Countries Economic growth in many countries is a slow bitter process. With disease, current high population numbers, growth in population, limited resources, and much more will limit a small and poor country’s from being able to build capital. The AIDS virus has taken many innocent victims and left others ill and unable to work. The numbers of AIDS victims are large by any standard. I was worried about the virus getting close to home when I learned of its existence in the late 1980’s. Since then I have come across several persons that currently have the virus or have died from the AIDS disease. Healthy individuals are needed to work in order to build product for consumption and exporting. Economic growth through resources will build much needed capital, which will increase a countries wealth in time. The HIV/AIDS pandemic has been most devastating for the smaller uneducated countries around the world. (Case, Fair, & Oster, 2009) The HIV/AIDS pandemic has been the most devastating disease in the world. Forty million were infected with the virus before the year beginning 2006. Twenty-five million people died from aids by the end of 2006. (Case, Fair, & Oster, 2009) “In 2005 alone, 3.1 million people died of AIDS and 4.9 million were newly infected with HIV (Case, Fair, & Oster, 2009)”. These numbers are...
Words: 1777 - Pages: 8
...MARKET STRUCTURES Brandi Milostan ECO204: Principles of Microeconomics Professor Mellon July 6, 2015 Welcome Mayor Knowsnothing Congratulations on the start of your new journey Mayor Knowsnothing. I appreciate the opportunity to work with you and get you up to speed on all of the market structures and answer any questions that you may have. I will explain to you the characteristics of each structure and provide you with examples of each from our neighborhood. I’ll help you to understand what pressures they are faced with and how government limitations and international trade might affect them. So, let’s get started on another adventure for you in learning market structures! Let’s Learn the Market Structures There are four different types of market structures. The table below lists the four market structures and each of their characteristics. MARKET STRUCTURE | NUMBER OF FIRMS | TYPE OF PRODUCT | ENTRY INTO INDUSTRY | FIRM'S INFLUENCE OVER PRICE | EXAMPLES | PERFECT COMPETITION | MANY | IDENTICAL | EASY | NONE | AGRICULTURAL CROPS | MONOPOLISTIC COMPETITION | MANY | DIFFERENTIATED | EASY | MODERATE | MANY LOCAL RETAIL OUTLETS | OLIGOPOLY | FEW | EITHER IDENTICAL OR DIFFERENTIATED | DIFFICULT | MODERATE TO SUBSTANTIAL | AUTOMAKERS | MONOPOLY | ONE | UNIQUE | IMPOSSIBLE | SUBSTANTIAL | LOCAL UTILITY | (“Market Structures”, Economics Online Tutor, July 24, 2012) Perfect competition is used as a model for the other market structures...
Words: 2234 - Pages: 9
...Market Structures Adam Timothy Rider ECO204: Principles of Microeconomics Evelyn Carlson 10/13/2014 When trying to gain insight into the local economy it is very important to understand the big picture of how the various market structures relate to each other. This can be accomplished by putting together some of the smaller pieces or characteristic of the market structure. These characteristics can be organizational, competitive or a variety of other features that categorize a firm as a specific market structure. Individual market structures can be described as the amount of firms producing identical goods and services. If you can identify the market structure you can often identify how they firms within the structure are going to price their products in the industry. The market structure will have an effect on the supply and demand of the different commodities in the market. The market structure will also influence barriers for entry and exit in the industry. In order to understand these structures in an economic community you must obtain an understanding of how they all work together to form the economic community. By the end of this report you will possess the necessary knowledge to understand the market structures in the micro economy. Before we begin to the inevitable breakdown of the individual market structures it is important to identify some of the key features of market structure in general. First it would be important to look at the...
Words: 2943 - Pages: 12
