Microeconomics Market Structures

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Any person or company that wants to open a new business or develop a new product needs to understand where the product or business fits within today’s society. Knowing where their product fits within the market structures will help the business owners in determining how to market their services or products. They also must know the number of consumers that require the product or service. This will give the local economy as well as global economy a much greater chance to accept the business or service. There are four market structures that businesses fall into; a monopoly, an oligopoly, a monopolistic competitor, and pure competition. All of these play a vital role in a healthy economic market. A monopoly is when a company has sole control of a product thus having control in the fluctuation of the product price. This means that they have the ability to charge what they want for the product because there is little to no competition. An example of a monopoly would be the DeBeers diamond company. DeBeers is the largest diamond producing company in the world and by being the largest producer this allows them to charge a much higher price for their product. This also gives them the opportunity to persuade the public with extreme advertising that diamonds have more value than any other jewel and are worth the higher prices (Hall, 2012). Having a monopoly on a product helps the distributor more than it helps the consumer by not providing a strong price competition. In economics an Oligopoly is when there are just a few independent suppliers of a specific product. By having a limited number of suppliers this allows the suppliers to control the products price and supply thus creating a sellers market. The seller’s market keeps the product price and availability among all of the companies the same and makes the competition between each company equal. When there is only a few suppliers of a product the companies advertise heavily to promote their company and services allowing...
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