Monopolistic competition has the attribute that there are many firms competing for the same group of customers.…
1. When determining how much of a profit a company will make, one has to look at a few deciding factors. Two of those are total revenue and total cost. Total revenue is the sum of a company’s sales of a particular product. Total cost is how much a company pays for production which includes fixed and variable costs. After total cost is deducted from the total revenue, the money left over is a profit. The goal of most is to maximize profits the best way possible. Total revenue and cost are very important when it comes to profit maximization because they are the guidelines of production. Total revenue is found by multiplying the price of the unit by the quantity produced and when compared to the total cost of each unit produced, a company can find out how many units to produce that would better maximize profits. Profit maximization is found by looking at the difference between the total revenue and total cost and determining which has the greatest profit.…
3. How does the demand curve faced by a monopoly differ from the demand curve faced by a perfectly competitive firm? Explain.…
It great depends on the characteristics that will show the greatest value of information. Often the market characteristics that offer such valued data are the area of competition and pricing. Examining these areas of market structure and give information on competitors who are producing the same products or services as AutoEdge. Even the behavior of a market can be carefully analyzed with the use of market structure because the information collected will illustrate how consumers are spending, their responses and behavior to a product or service, and the price of a product or service. In the following paragraphs there are four types of market structures that will be looked at; the monopoly structure, the oligopoly structure, the monopolistic competition structure, and the pure…
The structure of a market is defined by the number of firms that are competing in that market, along with factors such as: the ways in which these firms are alike or different, and the obstacles that exist in any new firms entering that market. In this report I will discuss Competitive Markets, Monopolies, and Oligopolies. I will point out what role each of the market structure play in the economy. This report will list the characteristics of each market structure. I will share how the price is determined in each market structure in terms of maximizing profits. This report will share how the output is determined in each market structure in terms of maximizing profits. I will share what the barriers are to the entries.…
Before any product can be sold, bought or manufactured there need to be an economic market were it is demanded along with a supply to accommodate the product demand. Market Structure is defined as an assortment of consumer products that are homogeneous, or in English terms...somewhat the in product diversity. Understanding the market is knowing the processes it uses to operate on a local but international scale. The competitive of a imperfect structure are almost the same as a quite identical to realistic market conditions where some, monopolists, monopolistic competitors, oligopolists, and…
Market structure is the state of a market with respect to the degree of competition amongst buyers and sellers. The market structure of the industry helps to determine its ability to set prices and make profits. The UK airline industry contains a number of different types of companies from budget airlines to private jets, but is essentially is an Oligopoly. This is due to the very high barriers to entry and the relatively small number of large firms due to this.…
According to the model of perfectly competitive markets, the demand curve for wheat should be a horizontal line, which is true for a single firm. In perfectly competitive markets there is no differentiation of products making the firms that reside in these market price takers. Therefore the farmer can sell as much wheat as he wishes at the market price, but cannot sell any at a higher price because there is no demand for it. This is why the demand curve is a horizontal line at the market price. But in the market supply and demand, when the price of wheat rises, the quantity of wheat demanded falls, and when the price of wheat falls, the quantity of wheat demanded rises. Therefore, the demand curve for the entire wheat market is a diagonal line. Where the demand curve intersects with the supply curve in the model of the entire market is where the market price is set. This is where a single firms horizontal demand curve will be placed.…
In order to differentiate between market structures, the first thing to do is define market structures. A market structure in regards to economics is known as the number of firms producing identical products.…
[pic]On the diagram which represents an industry a market supply curve intersects with market demand curve. The point of intersection is an equilibrium price. By looking at this diagram any small firm might decide to produce more output, as it will be insignificant for the market as long as the price will be the same for all of the output produced. So, as it is seen from the diagram representing firm’s supply, D=AR=MR. It means that if the firm will sell all of its output at the same price P, average revenue will be the same as marginal revenue-the extra revenue which comes from selling one more unit of output. In highly competitive market situation like perfect competition MR=Price, however, under imperfect competition for a profit maximizing company, MR might decrease as output will go up because the price will fall.…
In a perfectly competitive market each firm is a “Price Taker” , i.e. the prices and wages are determined by the market and the firm is so small relative to the size of the market that they can have no influence over the market price. For a market to be perfectly competitive there are certain conditions that have to be met.…
3. the extra revenue gained from each extra unit sold is therefore the market price.…
Above the kink, demand is relatively elastic because all other firms' prices remain unchanged. Below the kink, demand is relatively inelastic because all other firms will introduce a similar price cut, eventually leading to a price war. Therefore, the best option for the oligopolist is to produce at point E which is the equilibrium point and the kink point. This is a theoretical model proposed in 1947, which has failed to receive conclusive evidence for support. In an oligopoly, firms operate under imperfect competition. With the fierce price competitiveness created by this sticky-upward demand curve, firms use non-price competition in order to accrue greater revenue and market share.…
1. Under Ideal Rivalry – The average revenue curve is a horizontal straight line parallel to X axis and the marginal revenue curve coincides with it. This is since under ideal rivalry the number of firms selling an identical product is very huge. The price is determined the market forces of supply and demand so that only one price tends to prevail for the whole industry.…
Coca Cola knows that Crystal Light has made powdered drinks that have a longer shelf life than their bottled soft drinks and bottled waters, they also know that these are lighter in calorie count. Crystal Light’s price ranges anywhere from $2.49 to $2.69 in its powdered form and if I were to make powdered coke, I could sell it for a price range between $2.50 and $3.00. According to the webpage, www.investopedia.com/terms/p/priceelasticity.asp, price elasticity is “A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price” (INVSTOPEDIA 2014). There is a great amount of price elasticity with powdered soft drinks. Price elasticity will relate to my product because of the fact…