Market Structure Principles Of Microeconomics - 2359 Words

Daan Mutsaers Market Structure Paper Principles of Microeconomics Carol Bierce 10/19/14 Nowadays, in our society there are many different forms and shapes of companies whom all understand in which market they are selling their product. This is important to know because this way they can figure out how much to sell, the amount they need to produce, and the types of resources they need. A company is required to build a business environment that will determine these numbers. The name of this environment is called a market structure. The four most common market structures are: oligopoly, monopoly, perfect competition, and monopolistic competition. Therefore depending on the structure a certain firm is under, the company will have to determine it’s earlier mentioned numbers on this. High Entry Barriers, Oligopoly One of the market structures that have a high barrier to entry would be an oligopoly. An oligopoly is a very common market structure where about a handful of businesses are together in competition. Roger A. Arnold wrote in Microeconomics characteristics of a oligopoly: â€Å" There are few sellers and many buyers, firms produce and sell either homogeneous or differentiated products, and the barriers to entry are significant† (Arnold p269). For example, if we look at the US cellular phone market, Sprint, Verizon, T-Mobile, and ATT have created an oligopoly among themselves. In this example the four cellular phone companies don’t necessarily have to own the fullShow MoreRelatedEco 201 Final Project (Selected Topic Is Ford Motor Company)988 Words   |  4 Pagesemployees to hire for a factory. Microeconomics provides us with the tools, models, and concepts to better understand individual choices in the marketplace and how resource allocation is determined at the micro le vel. 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