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Based on the book above, write three paragraph analysis for four posts and Other Factors of Production posts that will focus on the chapters. please
Based on the book above, write three paragraph analysis for four posts and Other Factors
of Production posts that will focus on the chapters. please focus on the application of economic terms, its relation to your daily life, and how the theory applies to the economy.
Oligopoly: Firms in Less Competitive Markets Apple, Spotify, and the Music Streaming Revolution Few industries have experienced the disruptive force of technology the way the music industry has. For decades prior to the 1990s, large recording companies such a Iniversal Music Group, EMI, Warner Music, and Columbia dominated the music industry. By the mid-1990s, though, the music industry faced serious threat from the development by engine Germany of a new way of storing music. MP3 files com- Spotify pressed the amount of info though of information computer bits on CD to be small enough to make d songs from the Internet feasible. Many people bought CDs. converted the songs on them to MP3 files, and posted the songs to the Internet, where they were available for anyone to download for free, in violation of the copyright laws. compete with Spotify and Google Play Music. In 2016 In 2001, Apple introduced the iPod, the first success- Amazon launched Amazon Unlimited Must ful portable MP3 player. As CD sales declined sharply, most Amazon Prime expe dited shipping service or $399 per month for owners of an record companies became willing to sell music in Apple's ITunes store, which opened in 2003 and allowed people to Echo voice-activated device. An industry like music stresaning that includes only a legally download millions of songs for $0.99 each. Although ed companies a 70 percent share of the is an stgopay. In an oligo depends on its interactions with other firms, In these indus- revenue from downloads, that didn't come close to replacing tries, firms mu what the record companies and musicians were liking from frakes which involve not he collapse of CD sales just deciding what price to charge and what quantity to pro- luce but also how much to advertise, which new technolo Apple's ITumes was tremendously successful, but it did not put an end to digital piracy. By 2015, many com how to manage relationships with suppliers, 3. many consumers were switching from buying individual songs to Stream. and which new markets to enter. Because there are relatively few firms competing in an ing songs from YouTube or ocher sites without purchas- oligopolistic industry, each firm must continually rea ing them. Several companies offered plans that allowed people to stream for free, although wish other firms' actions or risk a substantial decline in sales In similar to those on commercial radio stations. Spotify, a this chapter, we focus on strategk interactions among firms. music streaming service based in Sweden, and Alphabet's Google Play Music offered subscription plans that allogyed unlimited streaming for $9.99 per month without adver tisements. In 2015, Apple began offering Apple Music to York Trees, June 28, 2015 and Harsh Karp, "pple iTimes Sous Big Drop in Chapter Outline & Learning Objectives 141 Oligopoly and Barriers to Entry. page 480 show how barriers to entry explain the existence of oligopolies Game Theory and Oligopoly, page 484 Use game theory to analyze the strategies of oligopolisic firms. Sequential Games and Business Strategy. page 492 sa sequential games to analyze business strategies The Five Competitive Forces Model, page 496 Use the five compellive forces model to angle competition in an Industry. Economics in Your Life & Career If You Were Managing a Walmart, Would You Cut the Price of a Playstation 47 You are a manager at Walmart and are responsible for By selling for $50 less than our competitors, we will setting the prices of consumer electronics. Currently. gain a lot of their customers and increase our profit." you are charging $399 for a PlayStation 4 game which is the same price being charge being charged by Amazon, t Do you accept this proposal? As you read this chapter. Best Buy, and Target. Your assistant manager makes a try to answer this question. You can check your answer as against the one we provide on page 499 at the end of the following proposal: "Let's cut the price to $349. this chapter. 479 680 CHAPTER 14 Oligopoly: Firms in Less Competitive Markets "n studying perfectly competitive and monopolistically competitive industries, our analysis focused on how to determine a firm's profit-maximizing price and quantity. We concluded that firms maximize profit by producing where marginal revenue equals marginal cost. To determine marginal revenue and marginal cost, we used graphs that included the f included the firm's demand, marginal revenue, and marginal curves. In this chapter, we will study oligopoly, a market structure in which a small num- ber of interdependent firms compete. In analyzing oligopoly, we cannot rely on the same h analyzing perfect competition and monopolistic competition- fee two reactions: We need to use economic models that allow us to analyze the more complex business ese strategies involve more than choosing the profil-maximizing price and quantity. Even in determining the profit-ma roaming the poolat-maximizing price and quancity for an oligopoly firms demand curves and coat curves are not as useful an in the cases of p and monopolistic competition. We are able to draw the demand curves for competi- live firms by assuming that the prices these firms charge have no efled effect on the prices arms in their industries charge. This assumption is realistic when each firm is small relative to the market. It is not a realistic assumption, however, for firms that are as large relative to their markets as Apple, General Motors, or Walmart. When large firms cut their prices, their rivals in the industry often-but not always- respond by also cutting their prices. Because we don't know for sure how other firms will respond to a price change. we don't know the quantity an oligopolist wil sell pollst will sell as a particular price. In other words, it is difficult to know what am oligopolist's demand curve wi like. As we have seen, a firm's marginal revenue curve depends on its demand curve. w what an oligopolist's demand curve looks like, we also don't know what its mar ginal revenue curve looks like. Because we like. Because we don't know marginal revenue, we can't calculate the profit-maximizing quantity and the profit-max izing price the way we do for com- petitive firms. The approach we use in this chapter to analyze competition among oligopolists is called porte theory. Game theory cams be used to analyze any situation in which groups or individu- ah interact. In the context of cocomic analysis, game theory is the study of the dechiara of firms in industries where the profit of each firm depends on its interactions with other firms It has also been applied to strategies used in other contexts, such as international trade negotiations, political campaigns, and medical students chacsing residency programs. Oligopoly and Barriers to Entry EARNING OBJECTIVE Show how barriers to antry explain the existence of oligopolies. Oligopoly A market tructure An oligopoly is an industry with only a few firms. This market structure lies between dependent competitive madserves, which thig mary firms, and monopoles, which have only a tio. Every five years, the U.S. Bureau of the Census publishes four firm concentration arias that measure the fraction of each industry's sales accounted for firms, Most co omists believe that a four-firm concentration ratio greater than 0 percent maxate an industry is an oligopoly. However, concentration ratios have the following flaws as measures of the extent competition in an industry: . They do not include the goods and services that foreign firms export to the United Oligopoly and Barriers to Entry 481Step by Step Solution
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