Monopoly is a individual company or industry to bring forth alone goods or service and there are without replacements. Besides that, monopoly has few characteristic in this market which is individual marketer and many buyers, its produce alone goods and at that place hold strong barriers to entry this market.
Furthermore, there have four types of competition in this market which is perfect competition, monopolistic competition, oligopoly and monopoly. From this four type market, they have their ain definition and feature.
2.0 Introduction of inquiry 1
In economic, monopoly is a state of affairs in which an lone one company or industry owns all in the market for green goods and given a peculiar goods or service. A monopoly tends to hold specific information, such as patents or right of first publications, which are non allowed to other possible manufacturers. Monopoly has no competition in the market and it has alone goods and services to command the maker or provider in market and green goodss of goods or service, it can be impact the monetary values measure of green goods cardinal alterations. In monopoly, a provider and industries are control supply and demands, grade of monetary value and supply control imposed by the industry or companies is greeter. Therefore, consumer does non hold pick to choose cheaper merchandise or service.
Example of monopoly market is, a company like a Microsoft owning by Windows is besides belonging to monopoly. Most of the peoples are utilizing Microsoft to make their undertaking. Monopoly of the company ain by authorities is Post Office and Tenaga Nasional.
2.1 Answer of inquiry 1
2.1.1 Four Characteristic of monopoly
Monopoly market is individual marketer and a batch of buyers. Companies can freely to command the monetary values. Consumers have no pick to take other option. The feature of monopoly market are:
1. Single marketer and a batch of buyers:
Monopoly is a signifier of non perfect market construction because the green goods the goods and give the services is by one individual marketer or monopolizer. A monetary value of goods and service is besides to the full control by one marketer. Therefore, if the monetary values of the goods lift up, consumers need to accept and pay higher monetary values to purchase the goods and service because the monopoly market are to the full control and produce the goods and service by one individual monopolizer. So, consumers do non hold pick to take goods from other company or industries. Monopolist can maximise the net income in the long tally.
2. Unique goods
Monopoly market bring forthing alone goods, there does non hold close replacements in the market topographic point. Monopoly market is freedom to alter the cost of the goods or services. Example of Windows company, they are utilizing their ain thought to organize their ain goods and service, which is Microsoft. There do non hold any other replacements in this market.
3. High barriers to entry into monopoly market
A monopoly in the market is a strong barrier to come in the new or others industry. Monopoly does non confront competition because bash non hold other rival produce same merchandise to come in the market. It is limit on others new industry and difficult to come in in this monopoly market. Means other industries or company can non easy to come in the market and given goods. Monopoly control over the production and sale of the goods to implement certain economic barriers are imposed to entry possible antagonists. A monopoly market needs a big start up costs to come in a monopoly market.
4. Specialized Information about production techniques
Monopoly is a common characteristic by control of production or information is non available given to others. Producer normally have specialized information such as patents, right of first publication over thought and hallmark set up by jurisprudence to sell the services or goods. The monopoly of resources or technique is merely the company or industry can work it.
2.1.2 Example of monopoly
One of the best illustration of monopoly market is Microsoft office that owned by Windows company. There have no other rivals and a batch of people are utilizing this Microsoft Word to make their occupation and acquire the occupation done easy. A Microsoft Office is alone goods of the words, it done have others alternative from others company or industry.
2.2 Diagram of monopoly
& A ; Acirc ;
A Monopolist is a monetary value shaper because does non confront any rivals. Therefore demand is monetary value inelastic.
A monopolizer will seek to maximise net incomes by puting end product where MR = MC
This will be at end product Qm and Price Pm.
If the market was competitory the monetary value would be lower and end product higher.
2.3 Decision of inquiry 1
In a decision, the feature of monopoly market is merely one marketer or manufacturer to to the full command the market. They are utilizing their ain thought to organize and bring forth the goods and service. Monopoly does non hold any rivals in the market. Therefore, there can freely to command the market monetary value and measure of goods produce.
3.0 Answer of Question 2
3.1 Difference between the characteristics of Perfect competition, Monopolistic competition, Oligopoly and Monopoly
3.1.1 Perfect competition
Perfect competition in market no participant can impact the monetary value. Their features are freedom flow of information and leave or come in the market, no entry barriers for new industry, which means, there is no demand for authorities ordinance, every bit good as a batch of buyers and Sellerss. Industry produce goods are consistent, there is no trade name. In the long term, company merely can do a normal net income but they can non derive unnatural net incomes in the short term. A recent article ( Charlie, et al. , 2011 ) states that industrialisation of agribusiness is one of the goods reflects perfect competition in the existent life. Perfect competition is faces a horizontal demand curve.
3.1.2 Monopolistic competition
Monopolistic competition is in a market have many industries to bring forth similar goods, but have a small spot different merchandises. There is no perfect option for the goods in market. Every industry can put the monetary values and measure does non act upon the market place. In a monopolistic competition is different from perfect competition in a production do non necessitate at the low costs. Therefore, concerns remain overcapacity. It is one signifier of imperfect competition.
The characteristics of monopolistic competition have many of industry to fulfill the market demand for the goods. The monetary values of goods can non be excessively much different from others because industries that under monopolistic competition are produce a differentiated goods which is close to alternative. A monopolistic competition is low barriers to entry which means new company can freely come in or go out the market. They earn normal net incomes in the market for a long term. Furthermore, company under monopolistic competition demand to hold some publicity or advertizement to pull and increase the gross revenues. In add-on, close alternate monetary values of goods are low ; it will pull some consumers to purchase their goods. It means monetary values of measures fall demand will increases.
In a monopolistic competition, for illustration, in Malaysia there have a batch of manufacturers produce different trade name of shampoo which Sunsilk, Follow me, Pantene and Schwarzkopf to fulfill market demands and consumers have freedom to take an option. At the same times the Sunsilk might be faces competition from others manufacturers of shampoo. If the monetary values of Follow me are low, it might be attract consumers to purchase it. Therefore, monopolistic competition is the existent market construction.
Oligopoly is the market chiefly by several providers or few companies in the industry. An oligopoly is a little group of concern to command the market for a certain goods and service. Oligopoly endeavor is major comparative to other market in which it operates. Therefore, the concern is major impact over monetary values of the market. In add-on, in oligopoly, the company is known as monetary value searchers. Oligopoly market is including car industry, soft drinks industry, air hose industry and photographic equipment industry.
The characteristics of oligopoly market are extremely centralized in competition and supply a same or similar goods and service. An oligopoly besides has strong barriers to entry like monopoly.
An oligopolistic company changes the selling scheme or monetary value ; it will significantly impact the opposition company. For illustration the soft drinks company between 100 plus and Revive, if 100 Plus cut down the monetary values of 50 cents per battalion, so that Revive will be influence by 100 Plus. If Revive do non react, it will lose major market portion. Besides that, 100 Plus will acquire a major market portion. Therefore the monetary value of Revive will most likely cut down. Furthermore, in the oligopoly market, barriers to entry new companies are hard. Barriers to entry might be structural such as limited authorities issues licence.
The definition of monopoly is means one marketer or one company to makes up the whole market. There is no rivals and no others seller can impact the monetary values of monopolizer because merely one individual marketer in this market. A monopoly market has a strong barrier to entry into this market. A Microsoft office is the one illustration of monopoly market.
3.2 Decision of inquiry 2
In the decision, perfect competitions in the market have a major figure of buyer and marketer. Monopolistic competitions in the market have a batch of industry to bring forth similar goods and fulfill the market needs. Oligopoly market is a few buyer and marketer. Company under oligopoly will act upon others company or industry. Monopoly market merely one company or industry control and sell the goods to the market. Consumers have no pick to take other option.
4.0 Conclusion and Recommendations
From this microeconomic assignment, I understand market construction which has monopoly, perfect competition, monopolistic competition and oligopoly and their features.