Thursday 11 July 2013

Monopolistic Competition

MONOPOLISTIC COMPETITION 


Monopolistic competition is a form of imperfect competition where by all firms produce similar yet not perfectly sustainable products. 
Monopolistic competition has large number of sellers
which means they only need small market shares to develop the business. 
Collusion in monopolistic competition does not exist hence illegal cooperation and conspiracy is nothing to worry about in monopolistic competition. 
Monopolistic competition is an independent form of business 
hence it’s easy way in and easy way out. 
The examples of monopolistic competition are, fish market, hawker stalls and so on.




Perfect competition is a hypothetical market structure. 
It is used as a benchmark against which other market structures are compared. 
The industry which is likely related to perfect competition is the agricultural industry. 
All firms in perfect competition produces identical product. 
Each individual firm assumed to be a price taker. To compare monopolistic competition and perfect competition, 
perfect competition are able to achieve productive efficiency, 
where monopolistic competition are not able to achieve productive efficiency. 


In conclusion, monopolistic competition is suitable for a small market because they are able to control the price of the market. Perfect competition could not control the price of a small market because they are not able to influence the price of the products in the market. 



Written by : Harith Chua 


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Television

TELEVISION 




Television brand will cause economic problem when the economy changes. 
The television brand like the LCD-TV could cause that relates to the demand and supply is elasticity. 
It could cause economic problem with the price increase in new models. 
The elasticity is the measurement to study on the changing of an economic variable that 
will affect others like the supplier sell his product at a low price, 
how much more he must sell or sell at the high price, 
how much less he must sell.

The demand side had the price elasticity of demand is a 
units free measure of responsiveness of 
the quantity demanded of a good to a change of price 
when others buying plans are the same. 
There are three types of elasticity demand
  • perfectly inelastic demand
  • unit elastic demand
  • perfectly elastic demand.


For television brand
it is a perfectly inelastic demand and elastic demand
the concept means that there are no changes in the quantities even as 
the price increases or decreases also had no price range. 
Example, the Samsung LCD-TV is a one of a kind smart television that 
had voice control and touch screen and no matter if the price increase or decrease next year
the quantity will never change no matter how many time the consumer buy.

The graph shows how the perfectly inelastic demand works and like if the price of the television had increase to the prize of twenty, the quantity will remain at four units.This had shows that the elasticity of demand is zero.



The graph shows how the unit elastic demand works, it shows that change in the quantity demanded is equal to percentage changes in the price. Like, the quantity is drop to the two units, it causes by the change of the price. The price elasticity is equal to one.





There are factors that influence the elasticity of demand could cause economic problem. There is the factor of the closes of substitutes mean that the product that had a closet substitute the more elastic the demand could be. This means that if there is a substitute for a product, people will demand it more.
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