Maximizing Profits in Market Structures Paper

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Maximizing Profits 1

Maximizing Profits in Market Structures Paper
Sharon Ballard
Michelle Council
November 7, 2010

Maximizing Profits 2
Maximizing Profits in Market Structures Paper
The structure of a market is defined by the number of firms that are competing in that market, along with factors such as: the ways in which these firms are alike or different, and the obstacles that exist in any new firms entering that market. In this report I will discuss Competitive Markets, Monopolies, and Oligopolies. I will point out what role each of the market structure play in the economy. This report will list the characteristics of each market structure. I will share how the price is determined in each market structure in terms of maximizing profits. This report will share how the output is determined in each market structure in terms of maximizing profits. I will share what the barriers are to the entries.

“Competitive market is many sellers that sell similar products with very little control over the market selling price.” A competitive market achieves efficiency in the allocation of scarce resources if no other market failures are present. The competitive market does very well because of the demand price and supply price are equal. The demand and supply prices cannot generate any greater satisfaction by producing more of one good and less of another. The characteristics of competitive market are: number of firms in the market, control over the price of the relevant product and the type of product sold in the market. An example of competitive market structure is a gas station. There can be many gas stations in a certain mile radius, but the more gas stations there are in a small area, then the higher the competitive market.

Price is determined in a competitive market by calculating the marginal revenue based on the quantity and...
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