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MICRO ECONOMICS ASSIGNMENT ON

NATURE OF BUSINESS OF DIFFERENT ORGANIZATIONS

PRESENTED TO MRS.Tehreem Sadiq PRESENTED BY


Mohsan Tanveer

Roll no.Mi11MBA005
MBA(IRM) FIRST SEMESTER

MARKET MODELS
There are different market models,which are different in nature and buyers and sellers,which are as follows.

MONOPLY:Monopoly is a market structure in which one firm is the sole seller of a product or service,the entry of additional firm is blocked one firm constitute the entire industry ,the pure monopolist produces a single unique,so product differentiation is not an issue

COMPANIES HOLDING MONOPOLIES (1)State bank of Pakistan:State bank of Pakistan holds monopoly of note issue,no other bank can issue currency notes in Pakistan because govt of Pakistan has given this authority to state bank of Pakistan,in this way state bank of Pakistan holds monopoly of note issue.

(2)Ferrari:Ferrari is producing a unique car no other company is producing such type of sports car thats why Ferrari company is the only seller of such cars,thats why the company charge price according to their own choice,and holds a monopoly (

3)Wapda:-

Water and power development authority of Pakistan is the only one company which provides electricity to the industries and domestic purposes,there is no other organization which is performing such type of function thats why WAPD holds a monopoly.

(4)PTCL:Ptcl is a company which provide landline and wireless phones in Pakistan it is the lonely company which provides landline phones in all over the country,and there is no competitor of ptcl and it holds monopoly.

MONOPOLISTIC COMPETITION:Monopolistic competition is characterized by a relatively large number of sellers producing differentiating products,it is also called non price competition a selling strategy in which one firm tries to distinguish its product or service from all competing products on the basis of attributes like design. Monopolistic competition is a type of imperfect competition such that competing producers sell products that are differentiated from one another as good but not perfect substitutes (such as from branding, quality, or location). In monopolistic competition, a firm takes the prices charged by its rivals as given and ignores the impact of its own prices on the prices of other firms

Major characteristics
There are six characteristics of monopolistic competition (MC):

Product differentiation Many firms Free entry and exit in the long run Independent decision making Market Power Buyers and Sellers do not have perfect information (Imperfect Information)

COMPANIES IN MONOPLISTIC COMPETITION:-

(5)Nokia:Nokia is producing different cell phones which are different in their specifications e.g memory,durability,size,colour There are also some other companies which are producing cell phones but nokia is producing phones which have different in characteristic from other companies,thats why nokia falls in monopolistic competition

(6)Dell:Dell is manufacturing different computers of different specifications, which are different from the computers manufactured by other companies such as apple, Compaq The personal computers manufactured by dell are different in memory,size,hard disk etc from other competitors thats why dell is in monopolistic competition.

(7)TOYOTA:Toyota s manufacturing different models of car which are sold in the market, there are also some other companies which are competitors of Toyota but this company is manufacturing cars which have different characteristics from other companies, So Toyota is in monopolistic competition

OLIGOPOLY:-

Oligopoly includes only a few sellers of a standardized or differentiated product so each firm is affected by the decisions of its rivals and must take those decisions into account in determining its own price and output. Oligopoly is a common market form. As a quantitative description of oligopoly, the four-firm concentration ratio is often utilized. This measure expresses the market share of the four largest firms in an industry as a percentage

Characteristics:Profit maximization conditions: An oligopoly maximizes profits by producing where marginal revenue equals marginal costs. Ability to set price: Oligopolies are price setters rather than price takers. Entry and exit: Barriers to entry are high. The most important barriers are economies of scale, patents, access to expensive and complex technology, and strategic actions by incumbent firms designed to discourage or destroy nascent firms. Additional sources of barriers to entry often result from 4

government regulation favoring existing firms making it difficult for new firms to enter the market. Number of firms: "Few" a "handful" of sellers. There are so few firms that the actions of one firm can influence the actions of the other firms. Long run profits: Oligopolies can retain long run abnormal profits. High barriers of entry prevent sideline firms from entering market to capture excess profits.

COMPANIES IN OLIGOPOLY:(8)Mobilink telecom:Mobilink telecom is a telecommunication company which is providing different services to its customers; the mobilink is one of the most famous companies of Pakistan which has different competitors such as ufone, telenor, zong, warid etc There are few telecommunication companies in Pakistan which are offering different attractive packages to the customers to attract them, these companies always take into account their output and price and compare t with the competitors to increase their sale So mobilink is in oligopoly

(9)PepsiCo:PepsiCo is a company which is producing cold drinks which have different strong competitors such as cocacola, they are selling almost same products the PepsiCo take into account the price of coca cola when deciding the price and output of its drink, because to stay in the market they have to attract the customers So Pepsi is in oligopoly

(10)NESTLE:Nestle is a company which is producing different products like mineral water, milk, drymilk etc. The nestle has many competitors such as aquafina, haleeb, Sufi etc. The nestle declares its price and output after taking into account the prices and demand of the products of its competitors