However, when the monopoly firm is established, the monopolist may spend some money on advertisement to acquaint the consumers about his product. But he will spend on advertisement only once. On the other hand, due to large number of firms and existence of competition among them, expenditure on selling costs is essential under monopolistic competition. 5. The monopolist can charge different prices from different customers for the same product and can adopt the policy of price discrimination.
The monopolistically competitive firm 's behavior appears to be no different from the behavior of a monopolist. Features of Monopolistic Competition: 1. Large Number of Sellers: There are large numbers of firms selling closely related, but not homogeneous products. Independent firms having limited share in the market. Hence, individuals will be having limited contribution in the market.
This means that sellers determine what products are produced, how, when and where they are made, to whom they are offered, and at what prices are based on supply and demand. In a command economy, the government determines all production, investment, prices, and incomes centrally. This means that sellers do not have a say in what they think about what price should be on a product or what products they get to sell. In a free enterprise economy private business operates in competition and largely free of state control. This means that companies constantly try to produce new products in hopes of outshining every other big business.
INTRODUCTION Market economy is an economic system where supply and demand controls the economy rather than government intervention, all resources are owned by individuals. Individuals decide how to allocate resources in a market economy the produce get to decide what to produce, how to produce, the price of the produce and what to pay employees. Their decisions are influenced by the pressure of competition supply and demand. Individuals trade assets such as cash to pick up great or administrations, the traded assets is based on shortage of each asset in the economy.If the supply of assets is low and request is high consequently the cost will be high verse versa. CHARACTERISTICS OF A MARKET ECONOMY A market economy is a sort of financial framework
If the curve is constant, the producer has constant returns to scale. 3 a) Features of perfectly competitive market structure: • Number of firms: in this type of market structure, the production is done by large number of firms. Because of higher number of firms, a small portion of the total supply is contributed by each firm and firms do not have market power. It depicts that no firm can determine the price and they
It is depends on the existing firms and the “height” of barriers to entry that attributes of an industry’s structure. The threat of new entrants will affect by: Firstly, the economics of scale as “high” barriers to entry into the industry that can make the industry more attractive because of the existing firms can earn expect above normal profits. Secondly, the product differentiations that the existing firms have their own brand identification and customer loyalty that will lead to new entrants use more costs to start other industry and then reduce their potential return. Thirdly, cost advantages independent of scale mean that the existing firms have a whole range of cost advantages. There are proprietary technology, managerial know-how, favorable access to raw materials, and learning-curve cost advantages.
Question No.1: What are the characteristics of a perfectly competitive market? The perfect competitive market is a description of a market where no participants are large enough to have the market power to set the price of a homogeneous product; this is because the conditions set for perfect competition are strictly applied. Realistically speaking, there are very few, if any, perfectly competitive markets. The closes comparison would be the buyers and sellers in some auction markets or for financial assets, which approximate the concept. The perfect competitive market serves as a natural benchmark against which to contrast other markets.
An example of this type of monopoly is Microsoft which have the complete monopoly over its resources in the market. Well, let me tell you why Microsoft is a Natural Monopoly Microsoft has a great reason to get started and support a complete control, if it could do so without true competition forcing it to get changed to other form prices. Software is unlike any other business. Because the marginal price of software is almost zero (and in the Case of OEM distribution and amount giving authority to do actually is zero, since the licensee pays for any making a parcel and distribution), its mean Total price as going on all the time says no to with amount, and because getting wider (greater) the number of software units only has to do with making copies, there are no diseconomies of scale and no need to increase fixed gives idea of price. Because marginal price is so low, mean Total price as going on all the time says no to as it asymptotically moves near marginal price, and unlike many other industries, mean Total price never gets up.
Producers and customers make their own decisions such that; even the prices are not determined by the forces of demand and supply. Also unlike the perfect competition, there is no perfect knowledge of products and services and their products. Consumers do not have information about other firms? productions and pricing decisions. Also all the firms have the same ability to influence the prices o commodities in the market.
These people have no line authority over the sales force or the sales force managers. They can only advise and make recommendations to the line managers. The sales force is not specialized by product. Instead, each salesperson sells the product of all two product managers. Halawani can use these structures when it wants some of the advantages of specialization by product line at the planning level but doesn’t need the specialization in the selling level.