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Supply and Demand / Market structures

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1) What are the advantages and limitations of supply and demand?

2) Analyze how organizations in each market structure (perfect competition, monopoly, monopolistic competition, and oligopoly) maximize profits.

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1) Supply and demand models are often used to describe free markets. They provide us with an efficient, graphical means to explore how the "invisible hand" affects the market. However, the model requires that other things are held constant. In the real world, prices are governed by forces besides supply and demand. In addition, often supply and demand are interconnected and cause ripples and feedback effects throughout the economy. A complete analysis then requires a detailed understanding of the structure of the economy. Therefore, supply and demand analysis is best used for small parts of the economy, where the ripple effect will be minimized. If we attempt to apply what we learn from small scale analyses to the whole economy, we end up with conflicting results. The "paradox of thrift" is an example of how this could happen. Increasing saving by spending less is is generally good for individuals, since most of us have limited resources and need to save some of them for the future. But if everyone saves more, ...

See Also This Related BrainMass Solution

Create a table differentiating Between Market Structures. Discuss labor markets in general and for a specific industry.

SEE ATTACHED. It is easier to read than below.

Part I: Differentiating Between Market Structures Table

Prepare a table that describes the characteristics of competitive markets, monopolies, and oligopolies. Format the table as follows:
a. Column headings should be the four market structures:
b. Row headings should help explain the basis for your market characterization:
Perfect competition Monopoly Monopolistic Competition Oligopoly
An example of an organization
Goods or services produced by the organization
Barriers to entry
Numbers of organizations
Price elasticity of demand
Economic profits (Is there a presence of economic profits? (Yes or no.)

Part II: Differentiating Between Market Structures Paper

Prepare a 1,050-1,400-word paper summarizing the content of the table. Address the following questions:
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a. Compare and contrast public goods, private goods, common resources, and natural monopolies.
b. Explain how labor market equilibrium is affected by the supply and demand of labor.
c. Select an organization with which you are familiar and identify the market structure of that organization. Evaluate the effectiveness of this structure for the organization.
d. For your selected organization, summarize the factors that affect labor supply and demand.

Be sure to properly cite your references. If you used an electronic source, include the URL. If you used a printed source please attach a copy of the data to your paper.

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