Choose and research a specific business that is publicly traded where there has been a pattern of change in a particular market model (monopoly, oligopoly, etc.).
Write a four to five (4-5) page paper in which you:
1. Describe the business and explain the general pattern of change of the particular market model indicating how this change is likely to impact business operations.
2. Hypothesize the basic short-run and long-run behaviors of the model in the business you have chosen in a “market economy.” Provide support for your assumptions and conclusions.
Suppose the demand for hockey sticks has greatly increased, prompting our company to produce more sticks. We should be able to order more raw materials with little delay, so we consider raw materials to be a variable input. We'll need extra labor, but we can likely increase our labor supply by running an extra shift and getting existing workers to work overtime, so this is also a variable input. The equipment on the other hand, may not be a variable input. It may be time consuming to implement the use of additional equipment. It depends how long it would take us to buy and install the equipment and how long it would take us to train the workers to use it. Adding an extra factory is certainly not something we could do in a short period of time, so this would be the fixed input.
Using the definitions given at the beginning of the article, we see that the short run is the period in which we can increase production by adding more raw materials and more labor. In the short run we cannot add another factory, but in the long run all of our inputs are variable, including our factory space.
The increase in demand for hockey sticks will have different implications in the short run and the long run at the industry level. In the short run each of the firms will increase their labor supply and raw materials to meet the added demand for hockey sticks. At first only existing firms will be likely to capitalize on the...