The paper "Market Structure and Coca Cola" is a great example of a case study on macro and microeconomics. The laws of demand and supply form a market economy and as such should be closely monitored. The extremes of the market economy are monopolies and perfect competition. Coca Cola Company falls within the two extremes and is monopolistic competition. Introduction The supply and demand of goods and services are one of the most vital concepts that relate to economics and is the cornerstone of a market economy. Demand is the amount of service or product that is desired by buyers.
The number of goods demanded refers to the total amount of goods that people are willing to purchase at a particular price. The relationship that exists between the quantity and price of goods is the demand relationship (Ernest & Bulent, 1996). Supply refers to the quantity of a given good that producers are able to supply when they obtain a certain price. The relationship between price and the supply of goods is referred to as a supply relationship. It is therefore concluded that price is a representation of the forces of demand and supply.
In light of the differences that pertain to the forces of demand and supply, the following market structures can be obtained; monopoly, oligopoly, monopolistic competition, and perfect competition. Monopoly A monopoly is a form of market structure that is comprised of a single seller/producer for a particular product. It can also be viewed that the single business is the entire industry. Entry into a monopolistic market is limited due to various impediments or high costs which may be political, economic, or social (Chamberlin, 1933).
A good example of a monopoly is when a government controls a particular industry for instance electricity. Other monopolies exist when an entity has exclusive rights to a particular resource. For instance, in Saudi Arabia, the reigning government has sole control of the oil industry. Also, monopolistic market structures may be formed when a company holds a patent or copyright that prevents other players from entering the market. For example, Viagra was patented by Pfizer (Rudolf, 2004). Below is a diagrammatic representation of monopoly.
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