Differentiating Between Market Structures Simulation Analysis

Essay by Flea_46University, Bachelor'sA+, November 2008

download word file, 6 pages 4.3

Every single household in the entire world purchases goods and services on a daily basis. Whether individuals purchase food, gas, household items, household utilities, travel tickets or any other goods or services, many people deem it beneficial to know the markets that they take part in as the consumer. In order to begin understanding the importance of market structures this paper will first define the term and concepts concerning market structures. Next, this paper will analyze a simulation given by the University of Phoenix as a learning tool to help understand market structures and lightly covering what the advantages and limitations of supply and demand identified in the simulation were. Then this paper will attempt to apply the concept of market structures to an organization the author is familiar with. Lastly, this paper will make an effort to analyze how organizations in each market structure maximize profits.

According to the BusinessDictionary.com

website, the term market structure is defined as "interconnected characteristics of a market, such as the number and relative strength of buyers and sellers and degree of collusion among them, level and forms of competition, extent of product differentiation, and ease of entry into and exit from the market" (BusinessDictonary.com, 2008). The four basic market structures in economics are perfect competition, monopoly, monopolistic competition and oligopoly. A market that is in the market of perfect competition, "is a market in which economic forces operate unimpeded" (Colander, 2004). A market that is considered a monopoly is "a market structure in which one firmmakes up the entire market (Colander, 2004). A monopolistic competition is "a market structure in which there are many firms selling differentiated products" (Colander, 2004). Oligopoly is "a market structure in which there are only a few firms" (Colander, 2004). Having defined crucial terms concerning market structures, this...