This website uses cookies to ensure you have the best experience. Learn more

Market Structures And Maximizing Profit Essay

1069 words - 5 pages

Market Structures and Maximizing Profits
/XECO/212 Principals of Economic

In this paper I will discuss competitive markets, monopolies, and oligopolies and what role each of these plays in an economy? I will also point out:

o What the characteristics of each market structure is?
o How the price is determined in each market structure in terms of maximizing profits?
o How output is determined in each market structure in terms of maximizing profits?
o What are the barriers to entry, if any?
o What role does each market structure play in the economy?
First I would like to discuss what a competitive market is. This market has a large number of buyers and sellers, such ...view middle of the document...

In the competitive market some of the characteristics are the market size, number of competitors & levels of fragmentation, intensity of competition, capital requirements, seasonal and cyclical factors, social, political, regulatory and environmental factors are some of the characteristics of the competitive market.   Some characteristics of monopolies are that it is a single seller of a good for which no substituted is not available. Most monopolies are also used to create legal barriers. Some characteristics of oligopolies are the small number of firms let oligopolies set prices and output levels, to some extent. However, because there are other rival firms, oligopolies must take note at how they react to its change in price, output, product or advertising. Strategic Behavior: self-interested behavior that takes into account the reactions of others. Mutual interdependence: profit doesn't depend entirely on its own price and strategies. The profit maximization is a point where the price is at a level where one finds a balance between demand and supply and price below or above this point will cause an increase in demand or increase in supply respectively. When you want to maximize the profit in the market you need to figure out which one of the firms or companies can produce the most to be cost effective and meet the demand level that returns the greatest profit.
Now, when it comes to profit we must look at barriers to entry that control the market by limiting competitors and any type of substitute. There are four primary barriers to entry resource ownership, patents and copyrights, government restrictions and start-up costs. Barriers to entry are a key reason for market control and the inefficiency that results. In particular, monopoly, oligopoly, monopsony, and oligopsony often owe their market control to assorted barriers to entry. By way of contrast, perfect competition, monopolistic competition, and monopsonistic competition have few if any barriers to entry and thus little or no market control (AmosWEB).
Lastly we will look at the role each market structure plays in our economy. The competitive market...

Other Papers Like Market Structures and Maximizing Profit

Course Policies Essay

539 words - 3 pages Week Three Student Guide In the third week, you will learn about the four market structures—pure or perfect competition; monopoly, monopolistic competition, and oligopoly—and the implications of the market structures for competitive strategies and profit maximization. You will participate in discussions that compare various market structures and their characteristics, evaluate the effectiveness of competitive strategies in market structures

Market Sturcture Essay

1067 words - 5 pages Market Structure XECO/210 Market structures consist of various characteristics of particular markets, including their dimensions and worth, the amount of providers and their market share, the purchasing behavior of actors in the market, and growth forecast. This paper will detail the many facets involved in market structures and the necessary factors involved in the potential for maximizing their profit. With the many speculative market


3339 words - 14 pages the short run will expand output: z. When marginal revenue is either greater than or equal to marginal cost. {. (Follow the profit-maximizing rule, “MR = MC”.) 15) A firm sells a product in a purely competitive market. The marginal cost of the product at the current output is $5.00 and the market price is $5.00. What should the firm do? |. Following the profit-maximizing rule ((P = MR) = MC ), the firm should either

Micro Exercise

3089 words - 13 pages . Answer: D Comment: Recurring Diff: 1 Page Ref: 368/368 Topic: Market Structures Objective: LO1: Explain what a perfectly competitive market is and why a perfect competitor faces a horizontal demand curve. AACSB: Reflective Thinking Special Feature: None 2) Which of the following is a characteristic of an oligopolistic market structure? A) There are few dominant sellers. B) Each firm sells a unique product

Wealth Management Verses Profit Management

518 words - 3 pages Wealth Management verses Profit Management : To begin with , Profit management is all about maximizing profit and wealth management is all about increasing the worth of the equity or value of the company . Profit Management : Profit management is maximizing profit . It comes as a part of Profit and Loss Account . The main things to be considered in profit managemnet , is generating maximum revenue with the minimum cost invonved

Differentiating Between Market Structures

1196 words - 5 pages its goods. The firms that operate in competitive structures will have no control over their prices. Price management is when a firm has the ability to control the prices of its products. Public ownership is not common in monopolies and there are no price takers. A monopolist ensures the price for a product or service will surely increase profits. When marginal cost equals marginal revenue the profit maximizing price and output is at the same

Discuss How the Theory of Contestable Markets Could Impact on the Price and Output of a Monopoly Firm

687 words - 3 pages Market structures are traditionally distinguished between four types i.e. perfect competition, monopoly, monopolistic competition and an oligopoly. They are determined on the basis of the number of firms in the market, the type of product, whether homogenous or differentiated and whether barriers to entry exist or not. Due to various specifications of all structures a “casual chain” is seen running from the market structure to the performance of

Economics Ii Final

1145 words - 5 pages . Price and marginal revenue are equal at all levels of output… 31. Which of the following statements is correct? • A. The demand curve for a purely competitive firm is perfectly elastic… 32. Refer to the above short-run data. The profit- maximizing output for this firm… • C. 320 Units 33. The MR=MC rule applies… • A. To firms in all types of industries 34. In the short rune the individual competitive firm’s supply curve is that segment

Microsoft Word 2007

4607 words - 19 pages knowledge about prices and quality of the commodities and inputs. An ignorant consumer may buy the product at a price higher than the market price. Similarly, the unaware input-supplier may be offered a lower price than the market price of input. The profit maximizing entrepreneur must be fully knowledgeable about both the prices of output and input. EIQUILIBRIUM OF A FIRM Total profit of the firm thus becomes the maximum when the following


5172 words - 21 pages ) Perfect competition and monopolistic competition are similar in that firms in both types of market structure will A) act as price takers. B) produce a level of output where price equals marginal cost. C) earn zero profit in the long run. D) act as price setters. Answer: C Diff: 1 Topic: Market Structures 3) Oligopoly differs from monopolistic competition in that an oligopoly includes A) product


596 words - 3 pages price will be charged for OQD amount of output in the home market. The remaining amount OQF ? OQD = QDQF of the total output will be sold in the foreign market. The total output in the two markets is OQD + QDQF = OQF. The profit maximizing equilibrium condition of the firm can be written as MRD = MRF = AMR = MC. The total profit of the firm is given by the shaded area shown in Fig.  4 between the aggregate marginal revenue curve BCE and the combined

Related Essays

Market Structures & Maximizing Pro Essay

783 words - 4 pages Market Structures & Amp Maximizing Pro XECO/212 Momoh Dudu 10/12/2011 What is a the number of companies rivaling in a certain market, how they differ and how they are similar, and the task they venture when entering and exiting the market determines that companies market structure. What roles does each market structure play in the economy. Many assumptions are made about the different types of markets, including competitive markets

Maximizing Profits In Market Structures Essay

1123 words - 5 pages structures are the amount of firms in the current market, the barriers to entry for new firms, and the independence of firms determining pricing to increase and maximize total profits. This paper will cover the following: price determination and output determination in each market in terms of maximizing profit, barricade of entry, the characteristics of each market structure, and the role each market structure plays in the economy. Four elements

Maximizing Profits In Market Structures Essay

1480 words - 6 pages Maximizing Profits In Market Structures Reminder to always reword and put into your own voice before you submit any written assignment. Consider this a resource to use as you put together your final thoughts on your paper that you are submitting tomorrow. (My standard disclaimer on any written paper). All the best. Introduction Product and services are produced basically for final consumers and it must reach them in order to

Maximizing Profits In Market Structures Paper

563 words - 3 pages productivity, knowledge, and experience. The labor market is only in equilibrium when each company has purchased enough labor that is profitable at the equilibrium wage. The equilibrium wage is the wage rate that produces neither an excess supply of workers nor an excess demand for workers and labor market. A firm must determine how many workers are needed to keep the employment cost justifiable to ensure profitability of the company. Firms cannot allow