Type of Market | Perfect Competition | Monopolistic Competition | Oligopoly | Monopoly |
Number of firms | Very many | Many/ several | Few | One |
Freedom of entry | Unrestricted | Unrestricted | Restricted | Restricted or completely blocked |
Nature of product | Undifferentiated | Differentiated | Undifferentiated or differentiated | Unique |
Implications for demand curve | Horizontal: firm is a price taker | Downward sloping, but relatively elastic | Downward sloping. Relatively inelastic(shape depends on reactions of rivals) | Downward sloping; more inelastic than oligopoly. Firm has considerable control over price. |
Average size of firms | Varies | Small | Small | Large |
Possible consumer demand | Minimal | Mediocre | Large | Large |
Profit making possibility | Minimal | Mediocre | Large | Large |
Government intervention | High | Minimal | None | High |
Example | Oranges, celery | Clothing stores | Heating and electrical appliances | Local water company |
Microeconomics with Janae
Friday, 15 April 2011
Comparing Market Structures
Thursday, 14 April 2011
Game Theory
Game Theory is the idea that everyone lives their life like a game and every individual only makes decisions for their own personal gain. It is best explained by a poker game. Everyone is distrustful of those around them and they try and guess their opponents move before they take any action.
The game theory actually started when the Soviet leaders tried to plan and control everything. The old politicians knew that interpreting and expressing the general will of the people was impossible so they followed their self intrest. Game theory was also a way to mathematically analyze poker games.
I believe that the game theory still exists in a large amount of the population today. People like Martha Stewart and Conrad Black didn't steal money for the good of the people, they did it for their own personal advantage. People like this play their life like a game.
http://www.youtube.com/watch?v=54Dk3x4osik
The game theory actually started when the Soviet leaders tried to plan and control everything. The old politicians knew that interpreting and expressing the general will of the people was impossible so they followed their self intrest. Game theory was also a way to mathematically analyze poker games.
I believe that the game theory still exists in a large amount of the population today. People like Martha Stewart and Conrad Black didn't steal money for the good of the people, they did it for their own personal advantage. People like this play their life like a game.
http://www.youtube.com/watch?v=54Dk3x4osik
Wednesday, 13 April 2011
Monopolistic Competition
Monopolistic Competitive Companies
Size: | Small Companies | Medium Companies | Large Companies |
Features: | Coffee Shops | Nokia | Coca Cola |
Differentiated products | Different beverages and snacks | Different cameras | Different flavours of pop |
Control over price | Little control because of their competition with other coffee shops | A fair control over the price because of the demand and competition | Large control because there is a high demand for their products |
Mass advertising | Newspapers and radio | Commercials, magazines, and billboards | Commercials, magazines, and billboards |
Brand name goods | No | Yes | Yes |
Monopolistic Competition is a market structure that has a large number of companies that sell similar products within a narrow price range.
There is very little differentiation within this market structure, although there is a bit of differentiation between companies so that they aren't an exact replica of one another.
Tuesday, 12 April 2011
Competing as Starbucks
I think that Starbucks would be part of a perfect competition market because they have good coffee, loyal customers, and they are everywhere in the world. Starbucks realigned their business practices because aside from being fast and efficient they want to still provide the intimacy and romance between the customers and the baristas. A large amount of their stores closed because they weren't making a large enough profit and the unnecessary amount of Starbuck locations minimized the intimacy for the customers and baristas.
By shutting down several stores, Starbucks reduced their costs as well as their profits. I do think that Starbucks coffee is overpriced; however, they can get away with it. There is a large demand for their product, Starbucks provides good quality coffee, they are fast and efficient, and they have stores almost everywhere. If Starbucks were to decrease their prices they would sell more coffee.
This graph represents how the price of coffee effects the amount that is being sold.
By shutting down several stores, Starbucks reduced their costs as well as their profits. I do think that Starbucks coffee is overpriced; however, they can get away with it. There is a large demand for their product, Starbucks provides good quality coffee, they are fast and efficient, and they have stores almost everywhere. If Starbucks were to decrease their prices they would sell more coffee.
This graph represents how the price of coffee effects the amount that is being sold.
Other links used:
Monday, 11 April 2011
Long Run Costs and Economies of Sale
If I were to form a company I would create a chain of dance studios. My company would offer dance lessons of every style for every age. I would only have certified dance instructors teaching the classes and I would have an office person at every dance studio. My first studio would be in Kelowna, BC and as my company expanded I would open up studios in Kamploops, Penticton, Nelson, Cranbrook, and possible Vancouver. If my company was well off I would expand into Alberta.
My company would target people of all ages. Not only would my dance studios offer dance lessons but they would also offer fitness classes. The company would target people looking for a fun way to exercise, as well as dancers that wanted to perform and learn.
Some of the long run costs would include: power bills, heating, teachers wages, and office persons wages. Repairs of the facilities, costume rentals, and stage rentals are all short term costs. The fixed costs are rent or mortgage on the facilities.
The Studio Dance Co. is similar to the type of company that I would start. It offers dance classes in various disciplines as well as fitness classes. The only difference is that I would open up a chain of dance studios in different towns. The Studio Dance Co. has trained proffessional teachers, a comfortable waiting area, safe facility, and it also offers summer workshops. There wasn't much information on the financial aspect online, but by observing their website it seems that The Studio Dance Co. is financially stable.
http://www.studiodancers.com/
My company would target people of all ages. Not only would my dance studios offer dance lessons but they would also offer fitness classes. The company would target people looking for a fun way to exercise, as well as dancers that wanted to perform and learn.
Some of the long run costs would include: power bills, heating, teachers wages, and office persons wages. Repairs of the facilities, costume rentals, and stage rentals are all short term costs. The fixed costs are rent or mortgage on the facilities.
The Studio Dance Co. is similar to the type of company that I would start. It offers dance classes in various disciplines as well as fitness classes. The only difference is that I would open up a chain of dance studios in different towns. The Studio Dance Co. has trained proffessional teachers, a comfortable waiting area, safe facility, and it also offers summer workshops. There wasn't much information on the financial aspect online, but by observing their website it seems that The Studio Dance Co. is financially stable.
http://www.studiodancers.com/
Friday, 8 April 2011
Law of Diminishing Returns
In the article "The Diminishing Returns to Tobacco Legislation" the author, Pierre Lemieux, makes some good points about how the frightful pictures on tobacco cases can scare off potential and current smokers. His arguements weren't very clear throughout the article, lessening the debate.
I think that if the government kept the photos and warnings to cover only 25% of the case they would reach their "sweet spot". The government would increase their profits if they kept the pictures to a minimum. If they did that they would still make a profit, inform smokers of the risks, but they wouldn't scare the consumers away.
I think that the article would decrease the demand. I only think that because it focuses on the negative effect of the warnings and pictures.
Website of article: http://www.pierrelemieux.org/artdiminish.html
Example of the warnings and pictures:
I think that if the government kept the photos and warnings to cover only 25% of the case they would reach their "sweet spot". The government would increase their profits if they kept the pictures to a minimum. If they did that they would still make a profit, inform smokers of the risks, but they wouldn't scare the consumers away.
I think that the article would decrease the demand. I only think that because it focuses on the negative effect of the warnings and pictures.
Website of article: http://www.pierrelemieux.org/artdiminish.html
Example of the warnings and pictures:
Thursday, 7 April 2011
Elasticity and Revenue
My graph on the quantity, price, and total revenue of Joe Fresh Style yoga pants shows us that at the top of the demand curve, the demand for yoga pants is extremely elastic and on the bottom half the total revenue rises. As the price drops, both the elasticity and total revenue fall. The largest amount of total revenue($150) is reached when the quantity is 5 yoga pants and the price is $30 per pant.
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