Industry Market Structures and Competition Analysis
Explore the concepts of monopolistic competition, monopoly, and perfect competition in various industries such as automobile retailing, corn production, fast-food restaurants, and more. Analyze factors affecting market structures, pricing strategies, and consumer welfare.
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Presentation Transcript
DISCUSSION QUESTIONS Chapter 12-14
MONOPOLISTIC COMPETITION Do you think any of the following industries might be monopolistically competitive? Why or why not? If not, what market structure? Automobile retailing; Corn production; Postage stamps; Fast food restaurants; Battery manufacturing; Transportation and public utilities; It is sometimes said that there are more drugstores and gasoline stations than are needed. In what sense might this be correct? Does the consumer gain anything from this plethora of retail outlets?
MONOPOLY Acme Department Store has a sale on luggage. It is offering $30 off any new set of luggage to customers who trade in an old suitcase. Acme has no use for the old luggage and throws it away tat the end of each day. Is this price discrimination? Why or why not? Which of these industries chocolate bars, copper wire, or the local newspaper would it be most profitable to monopolize? Why?
PERFECT COMPETITION Which of the following observed facts about and industry are inconsistent with its being a perfectly competitive industry? Individual firms devote a large fraction of their sales receipts to advertising their own product brands; There are 24 firms in the industry. The largest firm in the industry makes 40 percent of the sales, and the next largest firm makes 20 percent of the sales, but the products are identical, and there are 61 other firms. All firms made large profits last year.
PERFECT COMPETITION What, if anything, does each one of the following tell you about ease of entry into or exit from an industry? Profits have been very high for two decades; The average age of the firm in the 40-year-old industry is less than 7 years; Profits are low or negative; many firms are still producing, but from steadily aging equipment.
