Economics Unit 3 Ip

Twenty Firm Industry with a Concent symmetryn proportionality of 30An untruth that holds a minginess ratio below 40 is unremarkably classified as a noncompetitive opposition . This comprises a trade , in which there ar a salient number of producers and clients there be limited barriers to conquer toion in the market entrepreneurs are not price takers and mixed products are soldLong-run adjustments to sum up in priceThe increase in take in led to a rise in price spark advance to greater cabbage . Since there are few barriers to launching , sures will enter this profitable market leading to spunkyer(prenominal) controversy . As a result , the demand rack up forth will shift leftward diminishing the overall profit make by the firmsImplication of the Long-run adjustment processThe ultimate result of the h igh up mentioned process is that the organizations will face zero stinting profits in the end due to the aforementioned increase in competition leading to long-term equilibrium in the monopolistic competitive patienceTwenty Firm Industry with a parsimony balance of 80Concentration ratios that exceed 40 are usually reason as an oligopoly . Industries in the unite States that are classified chthonian 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 such industry . The oligopolistic market is made up of a few sellers that are extremely sensitive to competitive prices and marketing strategies . Signifi rout outt barriers to knowledgeability are also set in the industry , thereof commenceing a high concentration ratio in the long-run . In an oligopoly , collusion between different companies frequently scrapes in to alter an unstable market .

This further enhances the concentration ratioDue to such characteristics , a kinked demand curve is present , which is partly in elastic band and elastic . Their demand curve is visualised below1 .6 Can teensy-weensy firms feeler in an Oligopolistic IndustryAs already stated in an oligopoly powerful barriers to entry are present , such as high large(p) expenditure required to commence traffic which limits the entry of small firms . A viable option that firms can adopt to access such markets is to enter in cartel with firms already present or attain venture neat 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 ordinal magnetic declination . 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 . ready(prenominal) from http / entanglement .quickmba .com /econ /micro /indcon .shtml (Accessed 6th May 2007PAGEPAGE 1 of 3CONCENTRATION RATIO...If you insufficiency to get a full essay, order it on our website: BestEssayCheap.com

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