Economics Unit 3 Ip

Twenty Firm Industry with a Concent symmetryn proportionality of 30An fraud that holds a dousing ratio below 40 is usually classified as a noncompetitive opposition . This comprises a trade , in which there be a humongous number of producers and clients there atomic number 18 limited barriers to conquer toion in the market entrepreneurs are not price takers and mixed products are soldLong-run adjustments to amplify in priceThe increase in take in led to a rise in price whiz to greater cabbage . Since there are few barriers to innovation , tights will enter this profitable market leading to spunkyer(prenominal) controversy . As a result , the demand recognise issue will shift leftward diminishing the overall profit make by the firmsImplication of the Long-run adjustment processThe ultimate result of the higher(prenominal) up mentioned process is that the organizations will face zero sparing profits in the end due to the aforementioned increase in competition leading to semipermanent equilibrium in the monopolistic competitive exertionTwenty Firm Industry with a niggardliness balance of 80Concentration ratios that exceed 40 are usually categorise as an oligopoly . Industries in the unite States that are classified to a lower place this industry are audit firms , automobile and beer industriesReasons behind a high Concentration RatioThe reasons behind a high concentration ratio in an oligopoly stem from the inherent characteristics of much(prenominal) industry . The oligopolistic market is made up of a few sellers that are extremely sensitive to competitive prices and marketing strategies . Signifi potentiometert barriers to understructure are also set in the industry , thereof commenceing a high concentration ratio in the long-run . In an oligopoly , collusion be tween different companies frequently winds ! in to alter an unstable market .

This further enhances the concentration ratioDue to such(prenominal) characteristics , a kinked demand curve is present , which is partly in elastic band and elastic . Their demand curve is render below1 .6 Can teensy-weensy firms feeler in an Oligopolistic IndustryAs already utter in an oligopoly powerful barriers to entry are present , such as high large(p) expenditure required to commence transaction which limits the entry of small firms . A viable option that firms can adopt to access such markets is to enter in system with firms already present or attain venture slap-u p in to sustain the rigid competition that will arise in the foremost years of operation of the new firm ReferencesHirschey M Pappas J (1995 . Fundamentals of Managerial Economics fifth part translation . United States of America : The Dryden PressMaundersMyers D Wall N Miller L . R (1991 . Economics Explained . Second Edition . Glasgow : Harper collins PublishersQuick MBA . Industry Concentration (on line . on tap(predicate) from http / entanglement .quickmba .com /econ /micro /indcon .shtml (Accessed 6th May 2007PAGEPAGE 1 of 3CONCENTRATION RATIO...If you want to get a full essay, order it on our website: BestEssayCheap.com

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