opportunity and are therefore critical to understanding how a market functions. The conditions that distinguish each market structure define the level of competition observed within the market which in turn determines the profit level that can be made. Because pricing strategies are intended to maximize a firm’s profit‚ understanding market competition is necessary when deciding an appropriate pricing strategy approach. The third section of this paper gives the pricing strategy for a real-world firm
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small firms. No single firm can influence the market price which is essentially the meaning of relative ease of exit and entry from the market. Another crucial aspect of long run pure competition is that the demand faced by the firm is perfectly elastic at the market price. Long run equilibrium outcome in pure competition results in an optimal allocation of resources. In a monopolistically competitive market structure‚ excess profits are eliminated in the long run through imperfect emulation of successful
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Market structure is the state of the market with respect to its competition. There are several different market structures such as perfect competition‚ monopolies‚ and oligopoly. An industry consists of all firms making similar or identical products. Economists assume that there are a number of different buyers and sellers in the marketplace (Heakal‚ 2014). In some industries‚ there are no substitutes and there is no competition. In a market that has only one or few suppliers of a good or service
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can focus on the industry environment for example‚ especially on customers‚ suppliers and competitors. An industries profit comes from how perfect the market is. In general the price a customer wants to pay needs to exceed the cost the company incurrs. With growing competition that gap will close and in a perfect market‚ there will be perfect competition and hence virtually zero margin. The other extreem would be a monopoly with most markets sitting in between‚ being oligopolies. Porter’s five
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Types of market a) Perfect competition - one in which every firm is to small to affect the mark price - many buyers & sellers - homogeneous product - free entry and exit - perfect knowledge of price cost ( no control over price) - perfect price elastic b) Monopolistic competition -many buyers & sellers -differentiated products which are close substitute - Free entry but firms only can product close substitutes -Some control over price -less perfect price elastic c)
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Introduction There are many market structures in the market‚ namely monopoly‚ perfect competition‚ monopolistic competition as well as oligopoly. The market structure we choose for our businesses is monopolistic competition. In this market structure‚ there are many competitors compete with each other to increase the sales so that they can earn profits. The product we choose to conduct our assignment is Pringles‚ one of the kinds of tidbits in the market. Pringles are a type of potato chips which
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the conclusion that free markets are efficient. Explain how these assumptions either do or do not apply to an industry of your choosing. Free market economics concludes that the two assumptions that make free markets efficient include; 1.) perfect competition and 2.) that buyers and sellers are the only actors interested in the outcome of the market. eBay is an example that I consider being the closest thing to a “perfectly” competitive market‚ albeit internet based. A perfectly competitive market
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environment in which businesses operate 2.1 Explain how economic systems attempt to allocate resources effectively 2.2 Assess the impact of fiscal and monetary policy on business organisations and their activities 2.3 Evaluate the impact of competition policy and other regulatory mechanisms on the activities of a selected organization. Understanding the behaviour of organisations in their market environment 3.1 Explain how market structures determine the
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contending for market share‚ are interdependent as an effect of market forces. There are two extreme types of market structure: monopoly and‚ its differing‚ perfect competition. Perfect competition is categorized by various consumers and suppliers‚ several goods that are comparable in nature as well as result‚ several alternatives. Perfect competition means that there are limited; barriers to entrance for fresh companies plus prices are determined via supply and demand. Consequently‚ manufacturers within
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incumbent’s customers‚ and entry decisions can be reversed without cost.” For a contestable market to exist there must be low barriers to entry and exit so that there is always the potential for new suppliers to come into a market to provide fresh competition to existing suppliers. For a perfectly contestable market‚ entry into and exit out of the market must be costlessThe reality is that no market is perfectly contestable (there are always some “barriers to contestability” – see your revision notes
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