Microeconomics the Science of Economics Term Paper

  • Length: 4 pages
  • Sources: 2
  • Subject: Economics
  • Type: Term Paper
  • Paper: #47531207
  • Related Topic: Monopoly, Oligopoly, Science

Excerpt from Term Paper :

A most relevant example of a monopolistic competitive industry is given by the fast food industry. There is a great supply and demand for fast food products; numerous companies make the products, from international conglomerates such as McDonalds, to small local stores. And everybody consumes one time or another fast food products, from children to adults and senior citizens. Furthermore, the industry provides a wide array of products, including cheeseburgers or hamburgers, fries or beverages, to lately include diet products as well, such as chicken salads. In addition, the prices implemented are rather similar in all sales points. The industry poses no major barriers to entry and there is sufficient information available online and offline about both products as well as those who produce them.

The oligopolistic competitive industry differs from the monopolistic competitive industry in the meaning that there are reduced numbers of producers and sellers. This offers them the chance to share the monopoly over the particular market. These few producers all have the capacity to influence the market, but none can control it, as they all depend upon each other. The world is filled with numerous examples of oligopolistic industries, at both national and international levels. Take for instance the national case of American car manufacturers. "The automobile industry in the United States is an oligopoly because only six firms (General Motors, Ford, Chrysler, Honda, Toyota, and Nissan) account for almost 90% of U.S." Another relevant example, at international scale this time, is offered by the oil industry. In this particular case, oligopoly is shared by the countries of the Middle East and South America.

The pure monopoly refers to the situation where a single company controls a particular industry. They are the sole provider of that good of service and can influence the price and supply as they wish. Pure monopoly is characterized by the lack of alternative or substitute products and numerous barriers to entry. Aside from these characteristics, the monopolistic industry can also be generated by a certain patent or right to produce the item, right not granted to other companies. "Examples of monopoly are public utilities such as gas, electric, water, cable TV, and local telephone service companies, professional sports teams, DeBeers, and Alcoa. Also, monopolies may exist at the local level because of geographic location."

Bibliography

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Smidman, M., G.C.S.E. Business Studies, Factors of Production, National Grid for Learning Cymru, http://www.ngfl-cymru.org.uk/vtc/ngfl/bus_studies/gcse_m_smidman/index.htm, last accessed on January 30, 2008

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Production Possibility Curves, Minnesota State University, Krypton, http://krypton.mnsu.edu/~renner/ppc.htm, last accessed on January 30, 2008

McCain, R.A., Monopolistic Competition, the William King Server, http://william-king.www.drexel.edu/top/Prin/txt/Imch/MC1.html, last accessed on January 30, 2008

2006, Financial and Investment Dictionary, Dictionary of Finance and Investment Terms, Barron's Educational Series, http://www.barronseduc.com/,last accessed on January 30, 2008

Monopoly, Fairleigh Dickinson University, http://alpha.fdu.edu/~koppl/note19.htm, last accessed on January 30, 2008

2008, Economics, Financial Dictionary

Smidman, M., G.C.S.E. Business Studies, Factors of Production, National Grid for Learning Cymru

2000-2008, Full Employment, Production Possibilities, AmosWeb Encyclonomic Web

The Process of Product Development..., KC Concepts

2008, Opportunity Cost, Investopedia, a Forbes Media Company

Henderson, D.R., 1999-2002, Opportunity Cost, the Library of Economics and Liberty

Production Possibility Curves, Minnesota State University, Krypton

McCain, R.A., Monopolistic Competition, the William King Server

2006, Financial and Investment Dictionary, Dictionary of Finance and Investment Terms, Barron's Educational Series

Monopoly, Fairleigh Dickinson University

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