Microeconomic is trades with economic sciences determination are made at the micro or low degree. Specify this more accurate, microeconomic as an analysis of the determinations made by persons or groups. The determination will impact the supply and demand for goods and service. The chief topics covered under microeconomics include theory of demand, theory of the house, and demand for labour and other factors of production.
Question 1 of this assignment is needed to clarify monopoly and its characteristic. Question 2 is needed to distinguish the characteristics of perfect competition, monopolistic competition, oligopoly and monopoly.1.0 IntroductionHow formation the monopolies in a state? Firms have sole ownership or usage of a scarce resource. Government grants a steadfast monopoly position, such as the Post Office. Firms holding patents or right of first publication can guarantee them sole rights to sell a merchandise or protect their rational belongings. For illustration, Microsoft ‘s ‘Windows ‘ trade name name and package contents are protected from unauthorised usage.
Firms merge to give them a dominant place in a market.1.1 Elucidate monopolyMonopoly means that a state of affairs in which a individual company owns all the market for some certain type of merchandise or service. There will hold no competition. So that, such an industry construction, the manufacturer will frequently produces a volume less than the sum which would maximise societal public assistance.
Monopoly is a individual provider in a market. For the intents of ordinance, monopoly power exists when a individual house controls 25 % or more of a peculiar market.1.2 Characteristic of monopolyFirst cardinal feature of monopoly is individual supplies.
Actually, the “ glandular fever ” portion of monopoly is intending that individual and “ poly ” portion of monopoly is intending that sell. The most of import facet of being a individual marketer is the monopoly marketer in the market. The market demand for a good is same with the demand for the end product produced by monopoly. So, this significance that makes a monopoly a monetary value shaper, instead than a monetary value taker.Second cardinal feature of the monopoly is produce alone merchandise. There are no close replacements available for the good produced by a monopoly. For illustration, Microsoft is a large package monopoly. Microsoft was common usage and monopoly on the Personal computer runing system market.
A monopoly company are sell the alone merchandise were non supply by another company because monopolies as a exclusive marketer.Third feature of monopoly is limitation on the entry of the other houses into the market. Monopoly house is intending that are merely steadfast in market. Some barriers of the other houses to entry the market that are authorities licensing or franchise, resource ownership, patents and right of first publication, high start-up cost and diminishing mean entire cost.
Other manufacturers are hard to entry the market of the same merchandise. For illustration, in power market TNB ( Tenaga Nasional Berhad ) is national electricity company. TNB is dominant electric public-service corporation in Malaysia. So, other houses are hard or impossible entry the power market.
Fourth feature of monopoly is specialized information. Monopoly houses are command the information, method of production and engineering are non available to other. This is comes in the signifier of legal established, patents, right of first publication and hallmarks. Monopoly house will cognize something or have some of import information that is non available to others. This “ something ” may or may non be patented or copyrighted. It could be secret formula or alone method.
For illustration, the process to develop the Microsoft is secrecy and patent.1.3 Explain the monopoly graphBased on the monopoly graph, super-normal net incomes in the long tally can keep by monopolizer. A monopolizer will maximise net incomes by puting end product where MR=MC. These will be at end product Q1 and monetary value P1. In common, the grade of competition in market will act upon the degree of net income.
Supernormal net incomes are possible, that country besides called economic net income. Following, the diagram besides show that the monetary value ( AR ) is above ATC at Q.1.4 DecisionMonopoly is intending that a individual marketer in a market. Four cardinal characteristic to formation the monopolies that is individual supplies, alone merchandise, limitation on the entry other houses into market, specialized information. Finally, the monopolies besides potential the negative consequence to the consumer.2.
0 IntroductionPerfect competition market besides called conjectural. Neoclassic economic experts believe that perfect competition would bring forth the best possible result for consumers and society. Monopolistic competition is market constructions in which several Sellerss are bring forth a same merchandise but the monetary value are set by their ain houses. Oligopoly means merely big houses are dominated the market. Monopoly is intending that merely a big houses are dominant a market.2.1 Features of perfect competition, monopolies competition, oligopoly and monopolyI have utilizing agribusiness as an illustration of perfect competition.
Perfect competition is incorporating many little houses in a market but no individual house can command the market monetary value or measure. The monetary value of the goods is merely following the chou market monetary value as given. The monetary value will non impact by the marketer and consumers. Perfect competition is produce indistinguishable goods.
All vegetable store is selling the same merchandise that besides called homogenous goods. Buyer can non distinguish the merchandises because there are non branded. Therefore, strong competitions are present because the perfect competition houses produce a good that is perfect replacement. If the marketer set the higher monetary value of chou so the purchaser will immediate take other goods that is called perfect replacement. Third characteristic is perfect resource mobility. There are non limitations to forestall new houses come ining the market because there is no need authorities ordinance.
Besides that, the houses are free to go forth the market without bar. The monetary value and merchandises in the market are investigated and updated by both Sellerss and purchasers that called perfect cognition. For illustration, information about the monetary value of chou will update by the Sellerss and purchasers daily.Some characteristics of monopolistic competition such as contain big figure of Sellerss and purchasers in monopolistic market. Example of the monopolistic is such as the eating house. No individual eating house can act upon the monetary value and end product of the market. There are bing competitions between all the eating houses. All eating houses merchandises are close replacement for each other.
Buyers prefer to purchase specific trade name of merchandises so the advertisement and gustatory sensation of the nutrients are of import during the procedure of determination devising by a purchaser. All eating houses are freedom of entry and go out the market. New eating house will bring forth differentiated merchandise under their trade name name. Next, monopolistic competition is absence of mutuality of houses. The eating house will explicate its ain monetary value end product policy upon its ain demand cost. Selling differentiated merchandise by each eating house contain limited monopoly power in fixing monetary value of their end product. These are divided into two ways that is monetary value competition and non-price competition. Price competition is intending that take downing the monetary value of nutrients to take advantages of higher gross revenues.
Non-price competition is intending that increase the demand of nutrients through advertizement.Example of oligopoly is such as the soft drink market. Oligopoly is dominated by little figure of big houses.
This market is control by the big houses. Hypothetical the Coca-Cola soft drink market contain 20 houses, but it is oligopolistic because the three largest houses account for over 60 % of entire industry gross revenues. Second characteristic is indistinguishable or differentiate merchandises. Identical merchandises is intending that focal point on procedure natural stuffs and the differentiate merchandises is intending that focal point on sold for personal ingestion. Third characteristic is barriers to entry this market.
The barriers are included the sole resource ownership, patents and right of first publication, authorities limitations and high start-up cost. If set up a new soft drink house must build a new mill and making more advertisement to advance their trade name so the start-up cost are expensive. Fourth characteristic is mutualist determination devising.TNB ( Tenaga Nasional Berhad ) is an illustration of the monopoly. First characteristic of monopoly is individual marketer. For illustration, TNB is exclusive supplies are supply the electricity for all citizen.
Second characteristic is limitation on the entry of the other houses into the market. The barriers of entry monopoly market are included authorities licence or franchise, resource ownership, patents and right of first publication, high start-up cost and diminishing mean entire cost. For illustration, TNB is dominant the electricity market in Malaysia. Third characteristic is alone merchandise. Monopoly house are selling the alone merchandise and the merchandises are non supply by other. Fourth characteristic is specialized information. Monopoly house are contain their ain operation method or explicate so their merchandise are alone and can non copy by other.
Fifth characteristic is full control over monetary value. The monetary value is puting by the monopolizer and the purchasers must accept it. Sixth characteristic is deficiency of competition. Therefore, monopoly house besides deficiency of invention because non show the competition in the monopoly market.2.2 Differentiate of four grade of competitionPerfect competition like agribusiness, Sellerss sell indistinguishable merchandise and the market monetary values are unaffected. Monopolistic competition like eating house, Sellerss are produce indistinguishable merchandise and advance their merchandises through advertisement to derive demand.
Oligopoly like soft drink market, this market contains many houses but merely dominates by some big houses. Monopoly like TNB and “ Microsoft ” is individual marketer in this market.2.3 Decision of inquiry 2Features of perfect competition are big figure of little houses, indistinguishable goods, perfect resource mobility and perfect cognition.
Monopolistic competition is incorporating characteristics that are big figure of Sellerss and purchasers, freedom of entry and issue, absence of mutuality of houses, selling cost, merchandise differentiate and competition among Sellerss. Oligopoly is incorporating characteristics that are little figure of big houses, indistinguishable or differentiate merchandises, barriers to entry and mutualist determination devising. Last, monopoly is incorporating characteristics that are individual marketer, alone merchandise, barriers to entry, specialized information, full control over monetary value, deficiency of competition and deficiency of invention.3.0 Conclusion and RecommendationMonopoly mean individual provider rule the market. Characteristic is individual marketer, alone merchandise, barriers to entry and specialised information.
Features of perfect competition are big figure of little houses, indistinguishable goods, perfect resource mobility and perfect cognition. Features of monopolistic competition are big figure of Sellerss and purchasers, freedom of entry and issue, merchandise differentiate and competition among Sellerss. Monopoly is selling the alone merchandise and the merchandises are non supply by other.