Maximizing Profits in Market Structures

1287 WordsAug 9, 20106 Pages
Assignment: Maximizing Profits in Market Structures 1 What are the characteristics of each market structure? A competitive market is many sellers that sell similar products with very little control over the market selling price. An example of competitive market structure is a gasoline station. There can be many gasoline stations in a certain mile radius, the more gasoline stations there are in a small area the higher the competitive the market. Monopolies: Monopolies are a group of business people who act as one. Considerable power is in the company’s ability to set and influence prices. The power is determined by the demand curve cladding the company and with almost no competition. Monopolies have no public ownership.…show more content…
The steeper the demand curves the better the discretion in pricing. Some businesses, during the day to day running of business, may choose to have a nonchalant or unconcerned approach to its competitors, ignoring the competitors’ market-related decisions can have detrimental consequences in securing the businesses’ place in the market structure is disadvantages, depleting instead of maximizing its profit and revenue. Managers must be diligently aware of their company’s competition at all-times to maximize profitability possibilities. “Managers, of oligopolistic competitive firms may engage in open price (or design-, service-, promotion-) warfare or other predatory or even criminal behavior to the end of eliminating competitors so that monopoly (or more-limited oligopoly) position can be achieved (Chapter D4, Oligopolistic Competition). What are the barriers to entry, if any? Competitive Competition market is the heart of the capitalist economy. Various levels of competition set the market structure. Monopoly and Oligopoly are the elements of a competitive market. Assignment: Maximizing Profit in Market Structure 5 Monopoly Monopolies have effective barriers to entry because they have certifications, franchises; patents and trademarks that make it difficult for competitors to enter a certain market. Exiting and dissolution are always achievable. Sellers are few and are
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