Download Week 4 Reflection

Running head: WEEK 3 REFLECTION
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ECO/365 Version 4
Principles of Microeconomics
Learning
Team Reflection
Paper:
Discuss this week’s objectives with your team. Include the topics you
feel comfortable with, any topics you struggled with, and how the topics
relate to your field.
Market
Structure
Prepare a 350- to 1,050- word paper detailing the findings of your
discussion.
Week 3 Reflection
This week, we learned about different conditions needed for perfect competition.
According to Colander (2010) “These conditions are needed to ensure that the economic forces
operate instantaneously and are unimpeded by political and social forces." Everything seems to
be determined by the supply and demand market. The concept of supply and demand is
becoming easier to understand each week as we are able to take each week and compare and
relate the objectives to our personal experiences within our field.
WEEK 3 REFLECTION
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Also this week we talked about market structure. All of the factors that were described in
the market structure were clear-cut methods of how businesses play a role in the supply and
demand atmosphere. Each company must have a valid role in the circular flow model to become
a successful business and retain positive net profits. It is important for new businesses to
understand all of the market structures and barriers that may cause difficulties upon entering into
a specific business trade. Examples of this structure were provided in the text for different
models including monopoly, oligopoly, perfect competition, and monopolistic competition. A
monopoly exists when a company is the only one providing services in an industry, and
dominates the competition. A good example of this would be an electric company. An oligopoly
is when only a few companies sell similar products. An example of this would be major car
companies such as Ford or GM. Monopolistic Competition is when many sellers sell different
products that are similar to the competition. An example of this would be the restaurant industry.
Competition (perfect competition) is when there are no barriers to entry, with many businesses
offering different kinds of goods. An example of this would be a retailer like Target or Walmart.
Profit maximizing strategies are adjusted based on the type of market structure. A sole
grocery store in a small town that is far from competitors does not use the same profit
maximizing strategy as a hospital or a producer of hand soap. The sole grocery would be
considered a monopoly and overstocking the store would not maximize profits. Keeping a
steady flow of supplies just below or at demand controls price and profits. A monopoly charges
a price that is above marginal cost. A hospital competes in an oligopoly market structure. An
oligopoly takes into consideration the reaction of competitors to changes in price or service.
Based on anticipated reaction a profit maximizing strategy is implemented.
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Many of the items we purchase at the grocery store, like hand soap, are produced by a
market that contains many sellers and a variety of differentiated products. A monopolistic
competition allows easy entry. Profit is maximized in a monopolistic competition when marginal
cost equals marginal revenue. Advertising is a key profit maximizing tool used by monopolistic
competitors. Advertising can cause a demand curve to shift by influencing consumer to buy only
a certain brand. Dove does a great job of advertising their products and influencing women of
their products benefits.
Each of these market structures have tools that can help understand the effectiveness of
competition and utilize graphs to understand the rate of change. When supply of a business
increases an entrepreneur must react to these changes to retain as much profit as possible. This
also applies if the demand of a product increases and adjustments will need to be made to
coincide that profits are maximized to the fullest potential. Some of the graphs can be considered
confusing, but they are helpful to understand the marginal profit that can be associated with the
finished good. We have learned that part of having a successful marketing structure, is to seek
competitive strategies when compiling a market plan. Also, understanding a market structure is
important in order to predict and define the consumer’s behavior. We have found that knowing
the four major market structures is effective when planning a marketing strategy.
Works Cited
Colander, D. C. (2010). Economics 8th ed. New York,NY: McGraw-Hill Irwin.