经济学RP

1. The mobile phone market is believed to be an oligopoly---what are two characteristics of this market structure?
In the mobile phone market, only a few large market shares, so this makes these companies has a strong monopoly. The quality of products the same, but the price of similar products is not the same, in an oligopoly, firms operate under imperfect competition. Intense price demand curve for the adhesive to create a competitive edge upward, companies use to non-price competition to produce greater revenue and market share. Oligopoly, there is access, which is necessary for enterprises to occupy the market share of the obvious obstacles conditions, most small, it can also be oligopolistic market structure exists. The most important and basic factor is that for the obvious economies of scale of the trade. The following is Sir Richard Branson's company into the mobile communications industry, it is possible the views of the price and yield behavior.
2. Illustrate with an appropriate diagram and describe the price and output behavior that may be seen in an oligopolistic market structure.
Knot above, demand is relatively elastic because all other companies’ prices remain unchanged. The following kink, demand is relatively inelastic because all other
companies will offer similar price cuts, resulting in a price war. Therefore, the best choice for the oligopoly in the G point and the equilibrium point and the kink point. This is the theoretical model proposed in 1947; it did not obtain conclusive evidence. In the market structure, there is a perfectly competitive. The characteristics of perfect competition
3. Choose another market structure and suggest two characteristics of this market structure.
In general, a fully competitive market exists; each participant is the "price taker" and had no effect on the participants of the product, purchase or sale price. Specific features may include:
Unlimited buyers / sellers unlimited - and are willing and able at a certain price to buy the product unlimited consumers are willing and able to provide products at a certain price unlimited producers.
Zero entry / exit barriers - it is easier to enter or exit a business in a fully competitive market.
Perfect information - price and product quality is considered to be known to all consumers and producers.
Transaction is no cost - buyers and sellers to exchange any cost.
4. For your chosen market structure and with the aid of an appropriate diagram describe the price and output behavior in it.
According to this diagram, there have three stages:
If prices rise, TR will decrease. The number in the first quarter, his marginal revenue is lower than the marginal cost of MC1, so it should increase profits to increase production.
Demand curve is a horizontal line, that means at a given price any amount of products can be sold. P=AR=MR. The point where MR intersects MC is the profit maximizing point. It is a point of maximum output. The profit-maximizing quantity QMAX is found where the horizontal price line intersects the marginal-cost curve.
Higher than at any point can MR losses, lower than any point MR economic benefits to the company where there in the industry more companies, MR will be reduced. The number in the second quarter, higher than the marginal cost marginal revenue MR2 MC2, so it should reduce the profits to increase production.
5. What two roles would profit have played in attracting Richard Branson to the mobile telephone market?
Financial investment
Retained earnings is still the most important funds to carry out new capital investment projects the company's source. Companies can also use to increase profits by issuing stock or bond funds. This is a simple and effective way to raise funds from the public, but it is only when the stock market boom and the demand for bonds is high interest on bonds, as well as very low. Profits of enterprises have more opportunities to make the next project, to expand its scale. This is an incentive for an entrepreneur
Market access
Profit is a signal, but also enters the market. In a purely competitive market, when supply increases, prices may decrease. In monopoly markets, it is difficult for new companies because the company is strong enough to protect themselves from the entry form a new competition. In oligopolistic markets, it is possible to obtain extraordinary profits of existing enterprises. This is the time for the new company. This means that when Virgin Mobile has the potential of the company's mobile phone market, a lot of extra profits. But this will lead to more competitors enter the market.
Objective of maximizing profits - corporate goal is to achieve marginal revenue marginal cost of sales, where they produce the greatest profit.
Homogeneous product - any product or service a particular market does not vary with the characteristics of the supplier. In the short run, perfectly competitive market is the low efficiency of production as output does not occur in the marginal cost is equal to average cost, but the selective efficiency, the output will always occur in the marginal cost equals marginal revenue, so the marginal cost is equal to the average income . In the long run, these markets are selective and productive efficiency.
In perfect competition, any profit-maximizing market price faced by producers is equal to its marginal cost. This means that the price of a factor equal to the marginal revenue product.
The characteristics of an oligopoly:
6. Analyze two other alternatives to profit maximization as a goal of
the firm.
Alternatives to maximize profit
Sales maximization is a process designed to maximize profits, not sales organization objectives. This is because the divorce of ownership and control. Shareholders based on the pursuit of money income. As Managing Director of the daily operation and management. Bay to expand their market share to ensure survival and to establish credibility, to prevent competitors. Virgin Mobile may be to recover the maximization situation. Companies should focus on shareholders and managers to communicate. It can learn from other experienced companies. They can select the appropriate directors by shareholders, and have frequent formal and informal links.
Growth maximization theory
Managers to find additional benefits, status, wages, but to increase his own company. They believe that if companies want to sell more, they must produce more. Therefore, we must increase production capacity of the plant, equipment, and development potential in the market is mature company may have entered new areas of diversity. Because of the growth potential merger, mergers, acquisitions. This will only occur if shareholders think they have more value this year.
7. Discuss what influences the shape of the total cost, average cost and marginal cost curves in the short run in a firm.
The total cost of curvet is upward sloping, which is the total fixed cost and total variable costs. The total cost curve is parallel to the total variable cost curve, the total number is between (CD) of the fixed costs of vertical distance. In this figure, AD is the total cost, variable cost and communication. Fixed costs are fixed. Therefore, they are parallel. FC + VC = FC.The total cost curve is upward sloping. TC curve as the result is always to TVC curve. Therefore, in the TC curve parallel to the TVC curve, when TFC curve up or down, training is as follows.
In the short term, ATC are 'U shape. In the short term, there is not enough time to allow the plant to the fixed assets of the changes by degrees. The company's factory capacity (at least one factor of production) is fixed in the short term. Study: decline in marginal revenue marginal product of the results have fallen sharply, and the result of declining marginal returns MC rise.But a law of diminishing returns. And then is dropped.
The AFC fall results in the ATC fall. When A VC rose as output fell more incerease AFC, ATC will rise. In the first, the marginal product lead to marginal increase in cost, the marginal decline in output led to decline in marginal revenue, marginal costs.
When the MC less than ATC, ATC will fall. When the MC greater than ATC, ATC will rise. This is why the average cost and marginal cost curve shape is due to U.。