Differentiating Between Market Structures Simulation
Differentiating between Market Structures Simulation
Using the link provided on the rEsource page, access and complete the Differentiating between Market Structures simulation. Based on your readings and the simulation, prepare a table that compares and contrasts the various characteristics of the 4 market structures. Format the table as follows:
a. Column headings should be the 4 market structures:
(1) Perfect competition
(2) Monopoly
(3) Monopolistic competition
(4) Oligopoly
b. Use the following Row headings to help explain the basis for your market characterization:
(1) An example of an organization from the real World market place.
(2) Goods or services produced by the organization
(3) Barriers to entry
(4) Numbers of organizations
(5)Price elasticity of demand
(6) Economic profits (Is there a presence of economic profits? (Yes or No)
c. Based on your learning and the simulation, prepare a 700-1,400 word description, summarizing the content of the simulation. Address the following:
(1) What are the advantages and limitations of supply and demand identifies in the simulation?
(2) Select an organization with which you are familiar. Identify the market structure of your selected organization. Evaluate the effectiveness of this structure for the organization.
(3) Analyze how organizations in each market structure maximize profits.
*Attached is the simulation.
Thank you.
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(1) What are the advantages and limitations of supply and demand identifies in the simulation?
The company is East-West transportation Inc. The company has four divisions namely, Consumer Goods, Coal, Chemical and Forest Products. As each of these divisions operates in different market structures the advantages and limitations of supply and demand are different. The first part of the simulation presents Consumer Goods Division that operates in perfect competition. The limitations of supply and demand in this case was that using supply or attempting to change demand, the Consumer Goods Division is not in a position to change the price. The division is a price taker. The advantage is that the Consumer Goods Division can adjust its output so that it can minimize its losses.
The second division is the Coal division, it is a monopoly and the Coal division needs to determine how to maximize its profits. The main advantage from supply and demand enjoyed by the Coal division is that the Coal division can change its prices. The change in prices can be used by the Coal division to reach a point where the marginal revenue is equal to marginal costs. The advantage from supply and demand is that the company can reach its profit maximizing point. However, the limitation of this structure is that Coal faces a downward sloping demand curve, which means if prices are increased the ...
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