Monopoly is an individual company or industry to produce unique goods or service and there are without substitutes. Besides that, monopoly has few quality in the forex market which is solo seller and many buyers, its produce unique goods and there have strong barriers to entry the forex market.
Furthermore, there have four types of competition in this market which is perfect competition, monopolistic competition, oligopoly and monopoly. Out of this four type market, they have got their own meaning and feature.
2. 0 Release of question 1
In monetary, monopoly is a predicament in which an only 1 company or industry possesses all searching for produce and given a specific goods or service. A monopoly tends to have specific information, such as patents or copyrights, which are not permitted to other potential providers. Monopoly has no competition on the market and it offers unique goods and services to control the maker or supplier in market and produces of goods or service, it can be affect the costs quantity of produce important changes. In monopoly, a distributor and makes are control supply and needs, amount of price and offer control enforced by the industry or companies is greeter. Therefore, consumer doesn't have choice to select cheaper product or service.
Example of monopoly market is, a corporation like a Microsoft owning by Home windows is also belonging to monopoly. A lot of the peoples are using Microsoft to do their process. Monopoly of the company own by government is Post Office and Tenaga Nasional.
2. 1 Answer of question 1
2. 1. 1 Four Feature of monopoly
Monopoly market is solitary seller and a lot of buyers. Companies can easily to control the prices. Consumers have no choice to choose other choice. The characteristic of monopoly market are:
1. Single vendor and a lot of purchasers:
Monopoly is a kind of not perfect market composition because the produce the products and give the services is by one single seller or monopolist. A price of goods and service is also completely control by one vendor. Therefore, if the prices of the products rise, consumers need to accept and pay higher prices to choose the goods and service because the monopoly market are fully control and produce the products and service by a unitary monopolist. So, consumers do not have choice to choose goods from other company or business. Monopolist can take full advantage of the profit over time.
2. Unique goods
Monopoly market producing unique goods, there does not have close substitutes in the market place. Monopoly market is flexibility to change the cost of the goods or services. Example of Windows company, they are employing their own idea to create their own goods and service, which is Microsoft. There do not have any substitutes in the forex market.
3. High barriers to entry into monopoly market
A monopoly on the market is a solid barrier to enter in the new or others industry. Monopoly does not face competition because don't have other competitor produce same product to type in the market. It really is limit on others new industry and hard to type in this monopoly market. Means other market sectors or company cannot easily to type in the market and given goods. Monopoly control over the production and sales of the goods to execute certain economic obstacles are imposed to entry potential adversaries. A monopoly market needs a sizable start up costs to enter into a monopoly market.
4. Specialized Information regarding production techniques
Monopoly is a common feature by control of development or information is not available given to others. Producer will often have specialized information such as patents, copyright over idea and trademark establish for legal reasons to sell the services or goods. The monopoly of resources or technique is only the business or industry can exploit it.
2. 1. 2 Exemplory case of monopoly
One of the greatest exemplory case of monopoly market is Microsoft office that owned or operated by Home windows company. There have no other competition and a lot of people are using this Microsoft Word to do their job and complete the job easily. A Microsoft Office is exclusive goods of what, it done have others alternative from others company or industry.
2. 2 Diagram of monopoly
A Monopolist is a cost maker because will not face any competition. Therefore demand is price inelastic.
A monopolist will seek to maximize profits by placing result where MR = MC
This will be at productivity Qm and Price Pm.
If the marketplace was competitive the price would be lower and productivity higher.
2. 3 Realization of question 1
In a finish, the characteristic of monopoly market is merely one vendor or producer to totally control the marketplace. They are employing their own idea to create and produce the goods and service. Monopoly doesn't have any competitors on the market. Therefore, there can freely to control the market price and level of goods produce.
3. 0 Answer of Question 2
3. 1 Difference between your top features of Perfect competition, Monopolistic competition, Oligopoly and Monopoly
3. 1. 1 Perfect competition
Perfect competition in market no participant can impact the purchase price. Their characteristics are freedom circulation of information and leave or get into the marketplace, no entry barriers for new industry, this means, there is no need for government regulation, and a lot of purchasers and vendors. Industry produce goods are consistent, there is no brand. In the long run, company only can make a standard profit however they cannot gain abnormal profits in the short term. A recent article (Charlie, et al. , 2011) declares that industrialization of agriculture is one of the products reflects perfect competition in the real life. Perfect competition is faces a horizontal demand curve.
3. 1. 2 Monopolistic competition
Monopolistic competition is at market have many companies to produce similar goods, but have a little bit different products. There is no perfect substitute for the products in market. Every manufacture can set the prices and quantity does not influence the marketplace. In the monopolistic competition differs from perfect competition in a creation don't need at the low costs. Therefore, businesses remain overcapacity. It is one form of imperfect competition.
The features of monopolistic competition have many of industry to satisfy the market dependence on the goods. The costs of goods can't be too much different from others because industries that under monopolistic competition are create a differentiated goods which is near solution. A monopolistic competition is low barriers to entry which means new company can easily enter or exit the marketplace. They earn normal income in the market for an extended term. Furthermore, company under monopolistic competition have to have some advertising or advertisements to entice and improve the sales. Furthermore, close alternative prices of goods are low; it will draw in some consumers to buy their goods. It means prices of quantities fall season demand will boosts.
In a monopolistic competition, for example, in Malaysia there have a great deal of suppliers produce different make of shampoo which Sunsilk, Follow me, Pantene and Schwarzkopf to meet market needs and consumers have flexibility to choose an alternative solution. At the same times the Sunsilk might be encounters competition from others providers of hair shampoo. If the costs of Follow me are low, it might be attract consumers to buy it. Thus, monopolistic competition is the true market composition.
3. 1. 3 Oligopoly
Oligopoly is the market mostly by several suppliers or few companies in the industry. An oligopoly is a small band of business to control the marketplace for a certain goods and service. Oligopoly enterprise is major relative to other market where it functions. Therefore, the business is major impact over prices of the marketplace. In addition, in oligopoly, the business is known as price seekers. Oligopoly market is including vehicle industry, soft drinks industry, airline industry and photographic equipment industry.
The features of oligopoly market are highly centralized in competition and offer a same or similar goods and service. An oligopoly also offers strong barriers to entry like monopoly.
An oligopolistic company changes the marketing strategy or price; it'll significantly affect the opposition company. Including the carbonated drinks company between 100 plus and Revive, if 100 Plus decrease the prices of 50 cents per pack, so that Revive will be affect by 100 Plus. If Revive do not answer, it will lose major market talk about. Besides that, 100 Plus will get a major market share. Which means price of Revive will likely reduce. Furthermore, in the oligopoly market, obstacles to entry new companies are difficult. Barriers to entry might be structural such as limited federal government issues license.
3. 1. 4 Monopoly
The description of monopoly is means one vendor or one company to accocunts for the whole market. There is no competitors and no others seller can affect the prices of monopolist because only 1 single retailer in the forex market. A monopoly market has a solid barrier to admittance into this market. A Microsoft office is the main one example of monopoly market.
3. 2 Conclusion of question 2
In the final outcome, perfect competitions in the market have a significant number of customer and retailer. Monopolistic competitions on the market have a whole lot of manufacture to create similar goods and gratify the marketplace needs. Oligopoly market is a few buyer and vendor. Company under oligopoly will affect others company or industry. Monopoly market only one company or industry control and sell the goods to the marketplace. Consumers have no choice to choose other choice.
4. 0 Bottom line and Recommendations
From this microeconomic project, I understand market structure which has monopoly, perfect competition, monopolistic competition and oligopoly and their characteristics.
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