should be fully rewarded. 1. (a) Explain the differences between monopolistic competition and oligopoly as market structures. [10 marks] • large number of firms (m.c) versus a few dominant firms (oligopoly) • differentiated product (m.c) versus differentiated or standardized (oligopoly) • low barriers to entry (m.c) versus high barriers to entry (oligopoly) • interdependence of firms in oligopoly • comparison of the demand curves Examiners should be aware that candidates may take a different
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various countries. (Figure 1) These industries either have a market structure in which a small number of inter-dependent firms dominating the industry‚ that of a oligopoly‚ or are firms that is the only seller of a good or service that does not have a close substitute‚ characteristics of a monopoly. Oligopoly and/or monopoly arise for four main reasons: government restriction to the entry of more than one firm into a market‚ an individual firm commands control over a key resource
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References: Forgang‚ W. G.‚ & Einolf‚ K. W. (2006). Management Economics: An Accelerated Approach. M.E. Sharpe . Iran: OPEC May Need Further Output Cuts. (2008). World News Connection. Retrieved November 8‚ 2008‚ from EBSCOhost database. Kaplan‚ J. (1999). Unit 11 – Monopolistic Competition and Oligopoly. Retrieved November 8‚ 2008‚ from http://spot.colorado.edu/~kaplan/econ2010/section11/section11-main.html McConnell‚ C. R.‚ & Brue‚ S.L. (2004). Economics:
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Question 2. Choose the sector in South Africa Economy‚ which exhibits the features of Oligopoly. With more than 30 Million South African mobile phone owners according to data from the “SA Mobile Market “statistical handbook‚ and since this market is dominated by three companies‚ which exhibits the features of oligopoly in South Africa. Oligopoly refers to a few sellers with similar products and dominates the market and can influence each other. There are 3 mobile phone service providers‚ which
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they can be collusive or non-collusive. Obviously‚ in some markets‚ the oligopoly can be part monopoly. Another factor is that some participants of these markets may‚ from time to time‚ receive legal challenges from others. Evaluate the effectiveness of competitive strategies within market structures Within each market structure‚ competition plays a role in the establishment of the market. Perfectly competitive markets lay the foundation for competition in monopolies‚ and oligopolies. To consider
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Collusive and Non-Collusive Oligopoly What is an oligopoly? An oligopoly is a market dominated by a few producers . An oligopoly is an industry where there is a high level of market concentration. Examples of markets that can be described as oligopolies include the markets for petrol in the UK‚ soft drinks producers and the major high street banks. Another example is the global market for sports footwear – 60% of which is held by Nike a nd Adidas. However‚ oligopoly is best defined by the
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structure of an oligopoly. An oligopoly is a market structure where there are a few dominant firms whose behavior is interdependent. There are a few dominant firms relative to market size‚ and they each command a large proportion of the market share‚ thus having strong monopoly power. Examples of petrol companies include Shell‚ Caltex and Exxon Mobil. Their demand curve is downward sloping‚ meaning that they are price setters. Petrol is a homogeneous product‚ hence the oligopoly is known to be
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B. Answers to Short-Answer‚ Essays‚ and Problems 1. What are the major features of monopolistic competition compared to pure competition and pure monopoly? In monopolistic competition‚ there are a relatively large number of firms‚ not the thousands of firms as in pure competition. The monopolistically competitive firms produce differentiated products‚ not the standardized products of pure competition. Product differentiation means that monopolistic competitors engage in some price competition
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Economics Notes 2011-2012 Contents SECTION 1 – MICROECONOMICS Chapter 1 : page 2 Chapter 2 : page 6 Chapter 3 : page 10 Chapter 4 : page Chapter 5 : page 11 Chapter 6 : page Chapter 7 : page Chapter 8 : page Chapter 9 : page Chapter 10 : page Chapter 11 : page Chapter 12 : page SECTION 1 – MICROECONOMICS 1. The foundations of economics Economics – Social science‚ a study of people in society and how they interact with each other. A study of rationing systems‚ the
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and informally. A single entity that holds a monopoly cannot be a cartel‚ though it may be guilty of abusing said monopoly in other ways. As such‚ it is inaccurate to describe (for example) Microsoft or AT&T as cartels. Cartels usually occur in oligopolies‚ where there are a small number of sellers. In general‚ cartels are economically unstable in that there is a great incentive for members to cheat and to sell more than the quotas set by the cartel. This has caused many cartels that attempt to set
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