East-West Transportation Inc Market Structure Simulation

Essay by mamad69University, Bachelor'sA+, December 2008

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Market Structure � PAGE �1�

East-West Transportation Inc Market Structure Simulation

University of Phoenix Online

December 1, 2008

East-West Transportation Inc Market Structure Simulation

The simulation offered by the University of Phoenix in conjunction with the Principles of Microeconomics focuses on real life situations in market structures of firms. The scenario creates a distinction of market structures within a single corporation. The East-West Transportation Inc illustrates four different types of market structures within the firm. The divisions of the firm, which create the different market structures, are Consumer Goods, Coal, Chemicals and the Forest Products. Market structures, for firms, are a derivative of the number of firms in the particular market, barriers of entry for new firms and the distinct sharing with other firms in the same market in creating and determining pricing for consumers and maximizing profits (University of Phoenix, 2008).

The market structure simulation focuses on the ability of the CEO of East-West Transportation Inc to study and analyze the cost and revenue curves faced by the freight transportation company.

These cost and revenue curves, consists of Marginal Cost (MC), Marginal Revenue (MR), Average Total Cost (ATC), and Average Variable Cost (AVC). The CEO of East-West Transportation Inc determines through these studies where and how to restructure the different divisions. The CEO focuses on the division's advantages and limitations of supply and demand; the effectiveness of the divisions; and how each division of the firm maximizing profits and minimizing loses.

Advantages and Limitation of Supply and Demand

The Consumer Good's Division of East-West Transportation Inc operates as a perfect competitive market. A perfect competitive market structure has "a large number of buyers and sellers" (University of Phoenix, 2008, ¶5). With this type of market structure, no company controls the market price. The CEO develops the market price to...