Economics Assessment – outcome 3 1. Market failure is ultimately defined by when a market is unable to allocate the resources it has effectively. The two main reasons that a market fails is down to productive inefficiency and allocative inefficiency. Productive inefficiency can be described as when companies are not making the most of the inputs they receive. The output that has been lost due to this could have been used more wisely to satisfy consumer wants and needs. Allocative inefficiency is
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CHAPTER 25 Monopolistic Competition and Oligopoly Topic Question numbers ___________________________________________________________________________________________________ 1. Monopolistic competition: definition; characteristics 1-17 2. Demand curve 18-24 3. Price-output behavior 25-78 4. Efficiency aspects 79-88 5. Oligopoly: definition; characteristics 89-112 6. Concentration ratio; Herfindahl Index 113-140 7. Game theory 141-156 8. Kinked-demand curve model 157-176
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will react. It assumes that what its rivals choose to do will not be influenced by what it does. This is known as the assumption of independence. This is not the case under oligopoly. There we assume that firms believe that their decisions do affect their rivals‚ and that their rivals’ decisions will affect them. Under oligopoly‚ we assume that firms are interdependent. • There is freedom of entry of new firms into the industry. If any firm wants to set up in business in this market‚ it is free
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and many substitutes. Prices are determined by supply and demand and the producer has no leverage. In a monopoly there is only one producer or seller for a product. Competition to monopolies may be limited to high prices or copyrights. In the oligopoly market
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There are mainly five key players in the supermarket industry- Tesco‚ Asda‚ Sainbury‚ Safeway and Morrisons (ChinaCCM). Thus‚ the supermarket industry in the UK could be described as an Oligopoly Market. Oligopolies lie between the definitions of perfect competition and pure monopoly. Firstly‚ there are several sellers but only a few big companies who have a large market share in the industry. In the UK‚ the five big supermarkets totally have 3/4th of the market share (123help me! com). Secondly
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Dfiodifaje 3. Why do the United States‚ and many other counties‚ have antitrust laws on the books? What’s so harmful about oligopoly that warrants an entire body of law? The United States and many other countries have antitrust laws on the books to protect their consumers in their different markets. Having the abilities to both raise and lower prices are the reasons that oligopolies are so harmful. 4. Two consumers go to the insurance company to purchase some life insurance. James is a smoker and a
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profits rarely go uncontested. A firm making high profits normally attracts competitors. Thus situations of pure monopoly are rare in practice. Instead‚ the usual market structure in industries characterized by internal economies of scale is one of oligopoly‚ in which several firms are each large enough to affect prices‚ but none has an uncontested monopoly. The
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Avinash. Skeath‚ Susan. (2004). Games of Strategy‚ 2nd Edition. W. W. Norton & Company • Investopedia.com. Available at: http://www.investopedia.com/terms/p/prisoners-dilemma.asp#axzz1hAd0Dee1. [Accesed on: 19th December 2011] • Bianco‚ David P. Oligopoly Available at: http://www.referenceforbusiness.com/encyclopedia/Oli-Per/Oligopoly.html#b. [Accesed on: 19th December 2011] • Mehta‚ Foham. (2011). Bertrand’s Theory Available at: http://www.buzzle.com/articles/bertrand-competition.html. . [Accesed
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with the most choices; and more often than not‚ Stanley Bostitch falls into second on the list by product count. This anecdotal evidence hints that collectively‚ Swingline and Stanley Bostitch may very well have a strong share of a crowded market; oligopoly or monopolistic competition – it could go either way. Page 2 In terms of establishing the price for its heavy duty stapler‚ it is important to Swingline to price it reasonably close to its many substitutes. The competitors for this product
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Aquafresh White Trays. I believe the degree of differentiation within this industry is oligopoly. Oligopoly is a common market form. Oligopolistic competition can give rise to a wide range of different outcomes. Competition between sellers in an oligopoly can be fierce‚ with relatively low prices and high production. This could lead to an efficient outcome approaching perfect competition. The competition in an oligopoly can be greater than when there are more firms in an industry if‚ for example‚ the
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