you would go about setting prices for your product or service. My example of monopolized service or product of my choice is Internet cable service. We have many Internet carriers nowadays such as Cox, Comcast,Verizon and AT&T etc. If I can I monopolize Internet service, I would determine the price base on my cost plus desired profit, let’s day 50% profit rate. Since I’m the monopolist in this field, I have the final say about the price, and consumers are the price takers. Considering broadband Internet
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in setting prices of your product ANSWER Perfect competition demands very strict assumptions that are unlikely to be found in many if any markets in the real world. Markets that most closely equate to perfectly competitive ones are those in which there are very large numbers of buyers and suppliers, reasonably free entry and exit from the market and well informed consumers. It is in such markets that the purchase decision is driven by price. A perfect competitive (price taker) market exists
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the firms produce and sell products in the market. The unit also elaborates upon various Forms of Market Structure such as Perfect Market and * Imperfect Market (*Monopoly, Monopolistic Competition and Oligopoly). The conditions and determination of price under various Forms of Market Structure have been discussed. The content based classroom activity has been suggested at the end. It will help in developing Critical Thinking & Analytical ability among students which is the demand of this subject. Questions
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local retailers illustrates that there is some price-taking ability exists, but will not be able to follow the price maker due to the low prices that Coles and Woolworths sets for their products. They cannot be price makers due to the inability to be able to earn enough profit as a result of the costly payments made to suppliers due to the lack of influence over their suppliers. They buy smaller quantities of their products and thereby pay a higher price per unit and cannot earn from economies of scale
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different types of competition which firms may undertake, price competition and non-price competition. In price competition, firms compete on the basis of price, for example by increasing the price of a good or service, the demand will either increase or decrease accordingly depending on its price elasticity of demand. In non-price competition firms compete in less risky forms of competition other than price, such as advertising and branding. Non-price competition exists in imperfect competition (usually
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of producers and consumers in the market, the type of goods and services being traded, and the degree to which information can flow freely. Market structure Number of sellers Number of buyers Nature of the commodity Availabili ty of Related goods Price control Buyer seller Degree of competitiv eness Exit/ entry of firms Perfect competition Monopolistic competition Oligopoly large many few one large large large large
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limited number of companies. Just a few in which are at a constant battle to gain market power and control. | Price elasticity of demand | Market supply and demand determine the price. The price is elastic because the supply and demand is effected by the change in price. | A monopoly should be inelastic. This is because the supply and demand of a product is unaffected by change in price. | A monopolistic competition company is inelastic. The company can
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firm to profitably raise the market price of a good or service over marginal cost. In perfectly competitive markets, market participants have no market power. A firm with total market power can raise prices without losing any customers to competitors. Market participants that have market power are therefore sometimes referred to as "price makers" or "price setters", while those without are sometimes called "price takers". Significant market power occurs when prices exceed marginal cost and long run
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but few people realize just how important market structure is to the economy. In addition, some people do not realize how market structure influences the price they pay for a good or service, which in turn determines the market price. Furthermore, three market structures (competitive market, monopolies, and oligopolies) influences the market price and the economy. However, on the surface, competitive market, monopolies, and oligopolies market structures may appear different; they all share a common
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Firms are price takers because they cannot control the price of their products, as they are determined by the interaction of demand and supply in the entire market. Another characteristic in this market is that the producers and the consumers have total awareness of products including prices as well as the costs of the market, quantity and availability (Sloman, Hinde and Garratt, 2013), hence the mobility of the factors of production is perfect in the long run in this market. Being price takers, to achieve
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