A Monopolistic Competition Is Assessment Answer

MAS6282

Economics Assignment:

In the Monopolistic competition, there are no barriers to entry and exit and there is the larger number of firms which implies, each firm has limited market power to influence the price of the product so firm’s actions do not affect directly to another competitor as they are the price taker. In this market structure, all firms show that their product is slightly different from other competing firms in regards to Quality, Price, Marketing and Branding. Product’s design, reliability and service represent Quality of the product. Each firm manufacture different goods and demand for each firm’s product is downward sloping but there is the trade-off between price and quality. Product’s advertising and packaging show the marketing of the product. What is the name, sign and symbol of the product which differentiate goods from the competitor’s product called Brand and it is the main way in which firms seek establish quality differences? Let’s take an example of Toyota Camry how company change the models in last 20 years and what they achieve in different years.

Questions:

1) Explain, providing appropriate examples, why car manufacturers are constantly introducing new models.

2) Make decisions that incorporate the relevant benefits and cost analysis.

3) Explain and defend why it is important to understand the structure of the market in which a firm operates.