Micro Group Assignment
“In a perfectly competitive market, there are enough sellers and buyers of a good so that no single seller or buyer can affect its price. Price is determined by the market forces of supply and demand. Individual firms take the market price as given in deciding how much to produce and sell, and consumers take it as a given in deciding how much to buy” (Microeconomics, 3rd edition, 1995).
One of the market structures is monopoly. “Monopoly is the sole producer of a product; a monopolist is in unique position. If the monopolist decides to raise the price of the product, it need not worry about competitors who, by charging lower prices, would capture a larger share of the market at the monopolist’s expense. The monopolist is the market and completely controls the amount of output offered for sale”( Microeconomics, 7th edition, 2009). “Monopolistic competition describes a common market structure in which firms have many competitors, but each one sells a slightly different product but all are essentially competing for the same customers”(Economics Online, 2012).
One of the company that are using monopoly marker structure is TNB ( Tenaga Nasional Berhad). As mentioned, monopoly market structure is where a company is the only seller or producer. TNB is the only company in Malaysia which supplies electricity to households. The company remains as the only electricity supplier direct to consumer, because to start such a business as TNB will require a company to invest a huge amount of capital for the start-up of power plants with high electric capacity of megawatts. Therefore, it is impossible to start-up another company like TNB as the capital and resources required are too large of a sum.
Besides that, even though other company has enough capital and resources, they would have to face the legal barrier to entry of patents and licenses own by TNB, which TNB have gotten from the government to operate business. Thus, having just one company to supply electricity to
One of the market structures is monopoly. “Monopoly is the sole producer of a product; a monopolist is in unique position. If the monopolist decides to raise the price of the product, it need not worry about competitors who, by charging lower prices, would capture a larger share of the market at the monopolist’s expense. The monopolist is the market and completely controls the amount of output offered for sale”( Microeconomics, 7th edition, 2009). “Monopolistic competition describes a common market structure in which firms have many competitors, but each one sells a slightly different product but all are essentially competing for the same customers”(Economics Online, 2012).
One of the company that are using monopoly marker structure is TNB ( Tenaga Nasional Berhad). As mentioned, monopoly market structure is where a company is the only seller or producer. TNB is the only company in Malaysia which supplies electricity to households. The company remains as the only electricity supplier direct to consumer, because to start such a business as TNB will require a company to invest a huge amount of capital for the start-up of power plants with high electric capacity of megawatts. Therefore, it is impossible to start-up another company like TNB as the capital and resources required are too large of a sum.
Besides that, even though other company has enough capital and resources, they would have to face the legal barrier to entry of patents and licenses own by TNB, which TNB have gotten from the government to operate business. Thus, having just one company to supply electricity to