Maximizing Profits In Market Structures

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Maximizing Profits in Market Structures Your Name Axia University of Phoenix XECO 212 March 11, 2012 Your Professor The characteristics of market structures differ in many ways. There are many buyers and sellers in the competitive market, the characteristics of the competitive market are that all of the goods offered are very similar, buyers/sellers accept the price that is offered by the market, and firms can freely enter or exit the market. The characteristic in a monopoly are that there is only one producer and seller of the monopolized good and the possession of market power. Market power gives the monopoly the authority to control the terms and conditions of exchanges. Other characteristics of monopolies are competition and they encounter high barriers to entry. These high barriers are described as economic, legal and deliberate. Oligopolies also have three very important characteristics and these characteristics are that they have significant barriers to entry, are dominated by a small number of large firms, and are firms that sell either identical or differentiated products. While each market structure possesses its own characteristics, maximizing profit is the large concern for all but determined by different measures. Maximizing profit which means total revenue minus total goal is a competitive firm’s goal. The competitive firm takes the market price given and then chooses how much supply is needed so that a sales price can be determined for profit. The monopoly firm determines their price on the quantity of products to sell. The monopoly decides how much of its product to make and what price to charge for it. Individual financial gain determines the price for oligopolies. These firms find non price competition to keep from having to change the price of their products. The output of each product must be maximized to see a true profit which is
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