Economics – Eco 561
University of Phoenix
July 21, 2009
Market Structures Simulation
In this simulation, there are four different market structures that are discussed. Market structure is important in that it affects market outcomes through its impact on the motivations, opportunities and decisions of economic actors participating in the market (Fischer, 2009). They are Monopoly, Oligopoly, Perfect competition, and Monopolistic competition. Monopoly is a single seller of a product that is not offered by any other company. An Oligopoly is when there are a few sellers of a product that is standardized. A Perfect competition is when there is many seller of a standardized product and Monopolistic competition is when there are many sellers of a differentiated product (Fischer, 2009).
The monopoly in the simulation was the production and selling of Quasar’s all optical notebook computers. Its processor and memory use high speed optical conductors makes it five times faster than any existing micro-chip based computer. It has the capacity to last up to three days on a fully charged battery and is the only one of its kind at the present moment. The first part of the simulation asked the user to choose a price that would allow the computer to sell at a good rate. This writer chose $2550, and the simulation stated that this was a good price because it would allow all of the profits to increase.
The next part of the simulation asks the user to decide how much to spend in advertising as well as a possible re-pricing of the product. This is a part of the pricing strategies that companies use to decide how to manage and sell their products. The affect that advertising could have on the demand for the product would be good for business and profit. However, depending upon the current profit of the product, the company should not spend too much in advertising. Therefore, this writer chose to keep... [continues]
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