Question

For each economic situation, complete the following table considering the following:

a) What kind of market is your firm in?;

Monopoly, Perfect competetion , segmentcion of markets, or Oligopoly

b) Describe at least two identifying characteristics in the Marketplace

SITUATION (No.)	MARKET STRUCTURE	FEATURE (at least two)

The following situations are presented:

1. You own a firm dedicated to the production of luxury shoes and receive an invitation from the country "Y" to establish your signature in that country.  At meetings agreed with the government, you will find that they will issue a law granting you the absolute rights to produce this type of shoes as long as 30% of the employees of the firm are from the country.  In addition you receive a preferential rate of 10% on contributions.  Gross Domestic Product (GDP) has had a steady growth of 4.5% and the inflation rate has not had any significant growth for the past five years.  

2. You direct a firm dedicated to the subsea subtraction of a stone that when mixed with oil, results in a product of greater durability, thus benefiting the products derived from it.  This stone is found only in various parts of the world and there are about 10 firms dedicated to this activity.  To regulate prices globally, the 10 firms agree to partner to set prices on the world market and to be able to determine production when required by macroeconomic situations.

3. You are the owner of a bus dedicated to the sale of ice cream in recreational parks.  When analyzing market opportunities, you understand that you can develop a new flavor by mixing coconut, mango and lemon ice cream.  This new flavor is desired to sell near schools in addition to recreational parks.  You also implement a delivery service in the homes or labor offices adjacent to the schools or recreational parks where it is established.

4)         You, studying market opportunities, understand that the dairy industry has performed positively over the past 4 years, and decides to invest in this industry. So, it does what is necessary to start the business that includes but is not limited to the necessary documentation requested by the government, buying cows and the land among others.  The sale price is already set so you work with cost minimization to be more effective, resulting in an increase in profit through sale and volume distribution.

Answer 1

3. Government is granting absolute rights to produce a particular kind of shoe. Hence there is no competition but 30% jobs are to be provided to locals of that country.

For situation above: Monopoly as there will be only one seller for that kind of shoe. Firm will be price maker.

There are about 10 firms in the world for subsea subtraction of stones.

For situation above: Oligopoly as there are a few sellers. Firm will be price makers. There is a possibility of collusion.

I have developed a new ice cream taste.

For situation above: Monopolistic market, as product is differentiated and there can be many ice cream sellers. Firm is price maker.