Market Structures
The simulation for week four in the Principles of Microeconomics course at University of Phoenix entitled ‘Differentiating between Market Structures ‘is about a transportation company named East-West transportation Inc. The company has four divisions; Consumer Goods, Coal, Chemical and Forest Products. Each division functions in four unique market structures. The four market structures are Perfect Competition, Monopoly, Oligopoly, and Monopolistic Competition. Below is a summary of the simulation that provides a description of the market structures and how the factors affect the price and output at which the company can maximize profits under each structure. Below is also a chart explaining each of the four market structures as well as current examples of each.
Perfect Competition Monopoly Monopolistic Competition Oligopoly
An example of an organization Real Estate companies such as ReMax is a good example of an organization operating in a perfect competition market structure. United States Postal Service Samsung, Nokia Coca-Cola and Pepsi
Goods or services produced by the organization Sell homes and assist buyers in purchasing a home. Mail Information technology Soft Drinks
Barriers to entry There is no significant barrier to entry in a perfect market structure. Legal Barriers to entry for competitors There is no significant barrier to entry because barriers prevent competitiveness. Eventually, as more competitors join this type of market prices would increase until all existing companies make no profit.
Numbers of organizations Infinite One Many Although there presumably more than two organizations in this market structure there are only a few suppliers of a particular product.
Price elasticity of demand Perfectly elastic Relatively inelastic Highly elastic
Economic profits: Is there a presence of economic profits? No, there is no presence of economic profits. Yes, there is a presence of economic profits. The presence of economic profits is there
Perfect Competition Monopoly Monopolistic Competition Oligopoly
An example of an organization Real Estate companies such as ReMax is a good example of an organization operating in a perfect competition market structure. United States Postal Service Samsung, Nokia Coca-Cola and Pepsi
Goods or services produced by the organization Sell homes and assist buyers in purchasing a home. Mail Information technology Soft Drinks
Barriers to entry There is no significant barrier to entry in a perfect market structure. Legal Barriers to entry for competitors There is no significant barrier to entry because barriers prevent competitiveness. Eventually, as more competitors join this type of market prices would increase until all existing companies make no profit.
Numbers of organizations Infinite One Many Although there presumably more than two organizations in this market structure there are only a few suppliers of a particular product.
Price elasticity of demand Perfectly elastic Relatively inelastic Highly elastic
Economic profits: Is there a presence of economic profits? No, there is no presence of economic profits. Yes, there is a presence of economic profits. The presence of economic profits is there