Macroeconomics Monopolistic and Oligopolistic Markets

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| 2012|
Giovanna Alyssa Garcia

[Macroeconomics week2]|

In this week’s assignment we are to evaluate two industries. The following paragraphs describe both industries and its characteristics. By defining these industries I will determine its effects on the other markets in that firm and whether or not other firms can or cannot succeed.

If Industry A has twenty firms with a concentration ratio of thirty percent this is known as a monopolistic company with a low concentration. There are many characteristics of this type of industry one example is that it has limited control over the market; this is because there are many buyers and sellers. Another example is a monopolistic industry generally has a decent control over the price. If a company has enough influence over the market can be perceived as a price maker. A third characteristic is product differentiation. A product can have the same qualities as another but a few things determine its appeal. Product: location, packaging, and brand name all play a role on whether or not it will be sold. For example if a product is at an eye level it has a better chance of selling versus something on the top or bottom shelf. If the packaging looks pretty it has a more marketable appeal and finally if a product is made by a well-known brand such as Redbull. The last characteristic of a monopolistic company is that it is easy to enter and exit in and out of the market and still obtain some sort of profit.

If I was in this industry and there was an increase in demand I would expect either a firm adjustment or an industry adjustment. A firm adjustment means that there will be an increase in production of a good. An industry adjustment means that if a company has more than a normal profit other firm’s will enter the market and if they have a loss or just a normal profit other firms are less likely to enter the market. What I anticipate in long term adjustments means that the concentration...
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