257241275-TEST-2-docx.docx - As per to Layton, Robinson and...

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As per to Layton, Robinson and Tucker (2005) market structure is defined as thecharacteristic of the market. Furthermore, it is supported by stating that it includes thenumber of the firm active in the market, the degree of the products/services provided and thefeasibility of entering and existing the market. There are namely three market structure thatinclude perfect competitive market, pure monopoly, oligopoly and lastly the monopolisticcompetition market (Mankiw, 2008).Perfect competition marketis defined as the market that act as the price taker, that hasmany sells and buyers that sells homogenous goods and service (Layton, Robinson andTucker, 2005). Lastly with no barriers in entering and as well existing the market. In otherwords firms in the market is free when to stop or start their business.The fast food industry (Ungle bob chicken; that sells fry chicken in Malaysia) is one ofexample for this market. Anyone with a frying facilities, a small budget can enter into themarket by setting their business anywhere they can reach the customers because theinformation about the industry is easily available. However the thing is that they will have toset the market price and act as the price taker. In other words, the firms can sell whatever theywish but will have to charge the price. One way the firms determines their level of output isprofit maximization (Farnham, 2010).In this situation the profit maximizes when the verticaldifferences between the firms total revenue and total costs reaches the maximum. Where theprofit is equal to the firms marginal revenue and also the marginal cost. Furthermore there arethree scenarios in the market that includes:One is that the profit is equal to 0, here the firms in the market is actually enjoying a normalprofit in the long run and other is when the firm enjoys abnormal profit in the short run.Lastly is the subnormal profit loss, even though the firms is making loss they can continue ifthe firms variable cost is same as the firms total revenue. Since the firm may increase thetotal revenue next month and experience profit by gaining more than firms variable cost.However the unique thing is that the profit gain will always remain zero.Monopoly marketthat is defined as the market that has mostly a single seller to supply theentire industry (Layton, Robinson and Tucker, 2005). In addition they sell unique productsand is extremely high barriers to enter the market. In this market the firm is the price makerand does very little advertisement in the market. Furthermore the firms make maximum profitwhen the marginal revenue is equal to market cost. Another things is the imperfectinformation and the firms can discriminate the price.
Example; Malaysia electricity provider is one of the example for monopoly market. The‘tenaganasional’ is a large firm that provide electricity to the public living in Malaysia. Eversince the establishment of this firm in 1949 they have been in the market as sole electric

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Term
Summer
Professor
jensteller

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