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There is also a ‘captive’ element in a sort: it has a locations monopoly. 2. Barriers to entry derive from the ownership of assets, legal barriers and economies of scale. For legal barriers, a good example would be Astor in Malaysia. Government put barriers for other firm to enter into satellite broadcast business in Malaysia as government want to closely monitor what people can watch and cannot watch in Malaysia. An example of ownership of assets would be- De Beers controls the vast majority of the world’s diamond reserves, allowing only a certain number of diamonds to be mined each year and keeping the price of diamonds high.
Monopoly state competition and oligopoly: 1 . A concentration ratio is a measure that is used by economists to gauge the extent to which the largest firms in an industry dominate the market. The ratio indicates the percentage of total sales in the industry that are generated by Its largest firms. Yes, concentration ratio in a monopolistic competitive likely to be higher than for a perfectly competitive industry. Although, ‘a large number of sellers’ is a common characteristic of perfect competition and monopolistic competition, monopolistic competition will have a higher concentration ratio for its products than perfect competition.
In compare to oligopoly, perfect competition, and monopolistic competition, oligopoly will have the highest concentration among these three because of the characteristics of oligopoly where a market is dominated by very few numbers Of large firms. 2. Monopolistic competition might be preferred to perfect competition as an ideal market structure. Like perfect competition, monopolistic competition cannot make the positive economic profits that monopoly and oligopoly can make in the long run, so it is less wasteful of resources and will offer more quantity at lower prices than those market trustees.
However, unlike perfect competition, it offers consumers variety through its differentiated products and information through its advertising to make that differentiation. Measuring the size of the economy: 1 . The circular flow model is based on the assumption that all output is purchased by households in the product markets. The quantity of output multiplied by the price determines the dollar value of expenditures, which are receipts for business firms. All revenues (value of output) received by firms are paid to households as factor payments (income).
Factor payments include ages, salaries, interest, rents and profits, which are generated only by the value of output produced and sold. Hence, the value of businesses’ output of goods and services equals the income of households. 2. GAP only tells how big total output or income of one country is compared to another. To determine whether one country is better off than another, GAP per capita should be used, as it measures the average income earned in one country over another. This, though, still says nothing about the distribution of income among a country’s residents or the composition of the goods and services comprising the GAP.
It can often be found that a country with high GAP has very high income inequality which means many people are poor. So, GAP cannot tell whether people are happy or not. GAP does not measure the value of destruction to a nation’s stock of natural resources; it measures the flow of dollars determined by market transactions in a period of time. In the case of the BP ocean-based oil disaster, GAP would be increased because of the expenditures required to clean up the damage. GAP would not be decreased by an amount representing the environmental and social damage done by this disaster.