Firm
aims:1. Profit max
2. Market domination (sales max
3. Corporate growth (by expanding, diversifying
and take-overs)
4. Satisfying profits
Perfect
competition (agriculture, stock exchange)
Organisation
is a price taker.
1. A large no. of buyers and sellers.
2. Consumers aim to maximise satisfaction.
3. Producers aim to maximise profits.
4. All firms sell a homogeneous product.
5. There is a perfect knowledge.
6. All the factors of production are perfectly
mobile.
7. There is free entry to and exit from all
markets.
MC=MR=P=AC=AR=MU.
Monopolistic
competition (clothing and furniture).
Many
producers and product differentiation. Frequent entry and exit.
Oligopoly
(Cars)
Few
sellers, product differentiation. Barriers to entry.
Monopoly
(sugar (Tate and Lyle), electrical car components)
One
seller (>25%). No close substitutes + barriers.
Adv-1. Flat bottomed AC (ec. of scale, cars)
2. Research and development
Disadv-1. Redistribution of income
2. Allocative inefficiency (misallocation)
3. Lack of X-efficiency (minim. of costs)
Types:1. Natural (South-Africa-diamonds)
2. Historical (firm was first, Lloyds-insurance
3. Capital size (if much needed, chemical
industry)
4. Technological (many economies of scale,
cars)
5. Legal (patents, new ideas)
6. Public (post offices)
7. Contrived (arranged, legislation
against-Prohibition Take-over Regulation) RPM illegal by Office of Fair
Trading. EC have the restrictions on trade practices by Treaty of Rome. Policy
is to make AC=AR.
Price
discr:Geographical,Branding,Time,Dumping
{PAGE|1}
{info
author|Keith Siilats}, {DATE|05/11/95}, Subject: {info subject|Economics},
Words: {info numwords|200}
{PAGE|1}