Table of Contents1.0Introduction1
2.0 Oligopoly (1)
●Entry barriers (1)
●Non-price competition (1)
3.0 Explanation for Diagram in Oligopoly (2)
4.0 Pure Competitive Market (3)
●Lower prices (3)
●Low barriers to entry (3)
透支信用卡
5.0 Explanation for Diagram in Pure Competitive Market (3)
6.0 Roles of Profit in Market Economy (4)
●Demand for factor resources (4)桑叶有什么功效和作用
●Market Entry (5)
7.0 The other two alternatives to profit maximization (5)难忘的人作文
●Satisficing behaviour (5)
●Sales revenue maximization (5)
8.0 Influences on a Firm in the Short Run (6)
9.0 References (7)
1.0Introduction
Marco and Micro economic knowledge we had learned in this period is mainly to discuss about some major market structures in the entire market now. And they are oligopoly, monopoly and pure competitive market and so on. In this ca, the Virgin Mobile had entered in mobile phone market in the UK, which is an oligopoly market. In this market, Orange, V odafone, BT Cellnet and One2One are the oligopolists.
2.0Oligopoly
When a market or industry is dominated by a small number of llers, we usually believe an oligopoly appears. And there are two main features of oligopoly:
●Entry barriers: It’s a great block for the new company to be a long-run part
of an oligopoly market. Usually, many smaller firms operate on the periphery on such s market, which means the companies cannot reach the supernormal profits or affect much to market prices and output. Take Virgin Mobile (VM) as an example: Before VM engaged in the mobile phone market in the UK, there were some industrial giants conquered the market- Orange, V odafone, BT Cellnet and One2One, which account for a large market share.
Although VM is making profit, the money it earned is far less than any one of the oligopolist.
●Non-price competition:As a few company be dominant to an industrial,
pricing can be no longer an effective competitiveness for tho oligopolistic firms. Compared with pricing, after-sales rvice, extension of new market and advertising em to be more emphasized by them. In this ca, the VM is better to promote the competitiveness in such ways -- improving the after-sales quality, expanding into new markets , building their own brand and so on.
3.0Explanation for Diagram in Oligopoly
In the oligopolistic market, the oligopolists may react diverly to the different price variation trend of their rivals. If one oligopolist rais the price and other companies will not follow it to maintain the market share, however, if the company reduce the price and other companies must follow, which is to keep more market shares. It can be en in the kinked demand curve below.
Before the price is higher than P1, the product demand is elastic that means the price rais and the total revenue will reduce. But when the price is lower than P1, the product demand is inelastic -- the price reduces and the total revenue will also do. Thus, the company may able to reach a stable profit-maximizing equilibrium at the point G, so the companies in the oligopolistic market can not change the price optionally.形容心情大起大落
4.0Pure Competitive Market
In the pure competitive market structure, the company can compete with each other perfectly. There are two common characteristics that are considered to be “competitive” are:
●Lower prices: Generally, a perfectly competitive market exists when
every participant is a "price taker"which means the suppliers will have not
able to rai price for facing elastic demand curves, and no participant
换届选举办法
influences the price of the product it buys or lls.
牛和猪的属相合不合( en.wikipedia/wiki/Perfect_competition#Basic_structural_chara
cteristics ) .
So simply raising price will make a loss of demand and total revenue. The
cross-price elasticity of demand can reflect the customers’ attitude towards
some particular goods. The demand of substitute goods is holding pace
with the price when it has any change. Converly, the demand of
complementary goods would decrea when the price increa. In this
condition, customers will always find the most proper goods for
themlves.
●Low barriers to entry: Compared with oligopoly, the new firms would
be easier to enter in the pure competitive market. And the entry of new
participants will probably provide competition and ensure price is kept
下班啦表情包low in the long run.
5.0Explanation for Diagram in Pure Competitive Market
It is known to all that each individual firm is considered as a price taker.
Customers may not prefer to buy a product with a higher price. Becau of the characteristic (perfect knowledge) of pure competitive market, neither buyers nor llers can gain an advantage and firm may ll their goods at the point
where they have the maximized profit.
大班个案观察
From the short run view of a firm in a pure competitive market structure, the explanation of the diagram is as follow:
The price in a pure competitive market structure is decided by demand and supply, which can be en in panel on the right. When demand ris from D1 to D2, the equilibrium point goes from A to B and P2 is the established price. Becau of the price which a firm u stays at P2, marginal revenue is equal to P2 at last a verage revenue is equal to P2 as well. When MC=MR, profit maximization is achi eved, so the point which firms will stop producing should be C which ordinate is P
2 and abscissa is Q2. According to the diagram above, when quantity is Q2, ATC i
s equal to P1. So P2 subtract P1 is average profit and then multiply by Q2 can obta in total profit.
6.0Roles of Profit in Market Economy
Demand for factor resources
Scarce factor resources to flow where the expected rate of return or profit is highest. In the mobile phone market, when Richard Branson started to get profit in 2002, VM has 1,445,492 customers, wh
ich means stronger demands, more labour and capital are committed. With more scarce factor resources, VM may
