Monopolistic Competition To A Monopoly Transition By Wonks

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Monopolistic Competition to a Monopoly Transition by Wonks

Table Of Contents

Abstractiii

Introduction1

Discussion1

Types of Market Structures2

Monopoly Market2

Monopolistically Competitive Market2

Oligopoly Market3

Benefit of the Monopoly Market to the Stake holders of Wonks3

Transition of Wonks from a Monopolistic Market to a Monopoly4

Beneficial Market Structure for Wonks4

Conclusion5

References6

Abstract

This term paper covers the benefits and changes that are brought by the new monopoly market in an already long term competitive equilibrium firm. The paper highlights the changes which occur in price and output of the goods due to the change in market structure. It also explains market structure that will most benefit and suit the Wonks' potato chip monopoly and the benefits that are provided to the stake holders. All in all, the aim of this paper is to cover the basic concepts of microeconomics.

Monopolistic Competition to a Monopoly Transition by Wonks

Introduction

Microeconomics is one of the main fields of economics that studies the actions and decisions of individual consumers, firms and industries to deal with the available assets, usually in markets where selling and buying of goods takes place (Bade & Parkin, 2001). The branch primarily examines how decisions affect the supply and demand for products, and how to deal with money and related prices. The aim of studying microeconomics is to stay one step ahead in the market competition with other competitors. In order to rule the competition, it is necessary that prices are low, and profits are higher for consumers in contrast to other counterparts.

This case of potato chip industry is a prime example of intelligent and smart business technique, where two lawyers with economic power took benefit of the circumstances of the market to take the already successful business to new heights. They strategically transformed the structure of marketing from monopolistic to monopoly. As a result, they had no one in the market to compete with, and they were all set to sell. Now, the new running monopoly structure was named “Wonks”. A new management consulting firm was also hired by the Wonks in order to estimate a different long-run competitive equilibrium.

Discussion

The theme of this case surrounds around different types of market structures. Therefore, it is very important to understand these market structures and there consequences on the market condition and consumers.

Types of Market Structures

A market's structure is basically dependent on the number of competing firms in the market. The way of market controlling depends on the quantity of competitors and the level of market's control of individual competitor (www.amosweb.com). The selling side of market structure has three main types which are; monopoly market, monopolistic competitive market, oligopoly market.

Monopoly Market

A monopoly is a type of structure which consists of a single competitor and produces goods with no available substitutes. In monopoly, firm is the price setter and is also called price searcher because of facing downward curve for its product's demand. Monopoly's output demand is the demand that is made by the market. There are a number of hurdles which needed to be dealt with, while entering in the market. It is considered to be the worst ...
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