Differentiating Between Market Structures
Jeff Soyring
ECO365
30MAY2016
John Bayer
Differentiating Between Market Structures
This paper will discuss the microeconomic concepts and competitive strategies the automotive industry and specifically that of Hyundai. I will present my evaluation of the market structures and competitive strategies that align best with the automotive industry. The ability for a company to earn and remain profitable depends on the ability to assess the market structure over time.
Where a classification falls in to is determined by the business structure. What the business provides is dictated by the composition and how it is divided. The composition of that business competition is determined by the level and competition area. Some types of characteristics focused on are retailers and consumers, Level where the product has a substitute, exit and entry ease, price, and mutual dependence level. Variables are classified by these market structures: Monopolies, oligopolies, perfectly competitive markets, and monopolistically competitive markets (Colander, 2013). In a perfect competitive market the contributors do not influence the product cost (Colander, 2013).
Then price of a product in a competitive market is determined by marginal revenue, product quantity, and marginal cost. The firm can set the price based on the marginal revenue numbers when they are higher. The firm loses money when marginal revenue is less that marginal cost. By looking at marginal revenue and marginal cost a firm can increase it profits. Output balance can be obtained if the marginal cost is less than the marginal revenue. They can reduce quantity when the marginal cost is higher until they reach a balance. The firm has reached its maximum profits when the revenue is equal to the cost of output (McGlasson.2011). The market competitiveness plays in the economy plays a large role in maximizing profits which is total revenue minus total cost (Colander,...