ECONOMICS

Economics

Economics

Introduction

A monopoly is the only producer of a good for which there are no close substitutes. This puts the monopolist in a unique position: It can raise its price without losing consumers to competitors charging a lower price. Thus, the monopolist is the industry and faces the downward-sloping market demand curve for its product. The monopolist can choose any point along that demand curve; it can set a high price and sell a relatively small quantity of output, or it can lower price and sell more output. We are here taking Apple company as a Monopolistic industry.

An oligopolistic market consists of only a few producers. Furthermore, entry by new firms into the market is impeded; consequently, firms in an oligopolistic industry can earn substantial economic profits over the long run. Products produced by oligopolies can be relatively homogeneous, like steel, or differentiated, like automobiles. Many industries are oligopolistic, including aluminum, cigarettes, breakfast cereals, petrochemicals, computers, and tennis balls. We are here taking Coke Cola company as an Oligopolistic industry (Friedman, 78).

Discussion

Price elasticity of demand

Apple

There are basic states that can exist for the apple in relation to price because it is a Monopolistic industry: inelastic, and unitary, as, the prices are in the hand of the organization. An inelastic good, on the other hand, will see relatively little change in the demand for the good even when the price of the good changes. In this situation, a good that is inelastic can have its price increased and see very little change in the demand for the product. Individuals need apple to an extent that even changes in price will not change the quantity the consumer demands.

Coke a Cola

Within economics, the price elasticity of demand (PED) of a good refers to the change in demand for a good in response to a change in the price of that good. This is measured by the percentage change in the amount of a good demanded, divided by the percentage change in price of the good. This concept is often referred to simply as “elasticity” and is a measure of how responsive individuals are to changes in the price of a good.

In discussing how elastic certain goods are, there are three basic states that can exist for the good in relation to price: elastic, inelastic, and unitary. Similarly company of a Coke a Cola are elastic are those in which changes in the price will cause changes in demand. That is, if a coke a cola is elastic and its price increases then the quantity of that Coke a Cola demanded will decrease. If their price rises, as consumers will choose to purchase other goods as substitutes for these goods. If the prices of Coke a Cola will increase people demand will decrease and will going to have Pepsi, as Pepsi is a substitute of a Coca a Cola.

The barriers (low or high) that make the industry either in oligopoly or monopolistic competition market structure

Prices in an oligopoly are usually lower than in a monopoly, ...