Discussion #3 There are four key types of market structures in the market econom
ID: 1099045 • Letter: D
Question
Discussion #3
There are four key types of market structures in the market economy: perfect competition, monopoly, oligopoly, and monopolistic competition. Each of the market structures has its own key distinguishing features. The marketing strategies of firms also differ from market structure to market structure.
1. Pick a specific industry from one of the market structures and explain how it would function and maximize profit.
2. Which market structures do you think benefit consumers more than others? Explain by using examples.
3. We are daily exposed to a number of advertisements on TV, in radio and in other places. Which market structures are the most dominant in the advertisement industry? Why?
Please answer all questions and do not use pictured answers
Explanation / Answer
1>A monopoly is a market structure in which there is only one producer/seller for a product. In other words, the single business is the industry. Entry into such a market is restricted due to high costs or other impediments, which may be economic, social or political. For instance, a government can create a monopoly over an industry that it wants to control, such as electricity. For example, in Saudi Arabia the government has sole control over the oil industry.
Profit Maximization: A monopoly company maximizes profits by producing such that price equals marginal costs. A monopoly maximises profits by producing where marginal revenue equals marginal costs. The rules are not equivalent. The demand curve for a PC company is
perfectly elastic