Monopolistic competition

Monopolistic marketplaces continue to dominate

the market because there are a greater number of sellers than in monopolistic markets. Due to the vast number of vendors, there would be intense competition among the many markets, causing some of them to sell their commodities at cheaper rates in order to attract more clients and so earn more profits. Customers in monopolistic markets will so remain loyal until they decide to switch to near substitute products (McConnell,2012).

Oligopolies exist because most of the businesses are unable to raise the huge capital required for them to be operational.

There is a fear of some of the oligopolies lowering their prices and hence lead to losses to the other businesses. Some of the main oligopolistic in the US is National mass media like the Time Warner, the Apple who deals with the Operating systems and computers. The auto company like the General Motors which manufactures cars, the Sony which is a music industry, the Verizon which provides the smaller cell phones. The differences between the oligopolies and the monopolies are that there is few number of sellers in the oligopoly markets but many number of sellers in the monopolistic competition. The oligopoly markets produce similar but slightly different products, but the monopolistic competition has similar products. There are barriers to the entry in the market by the oligopoly market which includes high government policies as compared to the monopolistic markets where there are free entry and exit too.

Question 10. Advertising in monopolistic competition and oligopoly

Advertising is high in the monopolistic and oligopolistic markets are high to create awareness of the products to all the customers on the products available. The method is cost-effective as is at low cost one in providing the information to the consumers which enables them to cut their costs. Advertising is also a method which enables them to be able to achieve their economies of scale by identifying the gaps in the market (McConnell,2012). Providing the necessary information to the consumers will mean that there will be any high opportunity for increasing their operational efficiency while reducing costs on their operations. Advertising will enable in speeding up technological progress as the will need to identify new methods of achieving the customers’ awareness in their marketing process which will lead to a higher opportunity for improving their operations. Advertising may be excessive at times when most of the organization’s products will be made know through advertising only and being carried out while using the same manner of advertising.

Question 11. The beer industry

The beer industry is dominated by the Anheuser Busch oligopolistic firm. This has occurred as a result of the changes in demand and supply in the industry. There has been an increase in the changes in the taste by the customers on the products and most of them prefer consuming them at home which means that there will be a high production in portable packaging needed which is expensive. The supplies are affected by the rapid technological changes which mean that there will be a high investment in the production and research process which make most of the individuals not to enter in the business (McConnell,2012). There are challenges in the economies of scale where at the time the marginal revenues are lower than the costs incurred leading to low profits. This means that the long-term operational profits of the seller may be lower than had been anticipated.

References

McConnell, C., Brue, S., & Flynn, S. (2012). Economics, Brief Edition. McGraw-Hill Higher Education.