大二微观经济outcome1.docVIP

The report for eco- micro economic Introduction We also talk about the relationships on them. After three years of trading, Richard Branson’s Virgin Mobile is still a niche player in the mobile phone market. This report is to the purpose of analyzing Virgin Mobile’s situation, and advice its situation. This report I will talk about the micro economic knowledge about profit, output, and the structure of market and so on. Findings The mobile phone market is believed to be an oligopoly — what are two Characteristics of this market structure? Answer: An oligopoly is a market dominated by a few large suppliers. Two Characteristics of oligopoly are high degree of industrial concentrations and stabilized price rate. In the case, Virgin Mobile keeps that price stable and not often change. 2. Illustrate with an appropriate diagram and describe the price and output behavior that may be seen in an oligopolistic market structure. Answer: This means that the elasticity of demand is greater above the ruling market price than below it as shows in the above diagram. Price is OP and output is OQ. At prices higher than P demand is elastic—raising prices will likely cause loss of market share. At prices lower than P however the fear is that cutting priced will force rivals to follow suit and there will be little gain in the way of additional sales. (SQA, 2004 Economic1 text book) 3. Choose another market structure and suggest two characteristics of this market structure. Answer: Duopoly is a situation which only two suppliers of a commodity. The characteristics of this market structure are much the same like it is in oligopolistic structure. Two characteristics of duopolistic structure are barriers to entry and exist for large scale of production; non-price competitions are the difficulties prediction. 4. For your chosen market structure and with the aid of an appropriate diagram describe the price and output behavior in it. Answer: MR