Unit 3 Discussion 3

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1. Monopoly Market Structure

This is the market structure that is characterized by a single seller having sole power and control over the market’s strategic resources that are competed for by unlimited number of buyers/consumers. Under monopoly market structure, the monopolists determine both output level and prices at which their products or services trade (Goldberg, 2000). The market is also characterized by exit and entry barriers, thereby limiting the number of firms in the market. Given that monopolists have control over price, quality, and output, they therefore maximizes on the economic returns. In the short-run, monopolists enjoy supernormal profits given that they are price makers. Monopolists are profit maximizers and choose their equilibrium level of output and price at the point where marginal revenue equals to marginal cost (MR=MC) (Stackelberg, Bazin, Urch, & Hill, 2011). A practical example of industries that enjoy monopoly power is the electricity and power generation industries. The energy sector enjoys patent rights and protection that give it monopoly power. Therefore, the industry only prices at the point where marginal cost of production matches marginal revenue generated from the sales.

2. Perfectly Competitive Market Structure Benefits Consumers

Under perfectly competitive market, the equilibrium prices are naturally determined by the market forces of demand and supply with no single player having power to influence the prevailing prices, hence no price exploitation (Goldberg, 2000). Secondly, this market structure is characterized by production and allocative efficiency since they produce at the point where price equals marginal cost (P=MC) and produces quality products that are homogeneous in nature (Stackelberg, Bazin, Urch, & Hill, 2011). This market structure therefore produces a pareto optimal level of output and price that eliminates dead weight loss to both consumers and suppliers. One of such markets includes textile manufacturing industry that is characterized by free entry and exit. Given many buyers and sellers, consumers therefore benefit from high quality cloths and clothes at relatively affordable prices as no seller will benefit by increasing price above the equilibrium market rates.

3. Market Structure Characterized by Intensive Advertisement

Monopolistic Competition is a media form of market structure that is dominated by advertising. This owes to the fact that monopolistic competition market structure deals in products that are highly differentiated through branding, packaging, and advertising (Goldberg, 2000). To create a difference and have make more sales over competitors in the same market, suppliers in this market heavily invest in advertising a way of gaining a competitive edge over others (Goldberg, 2000).

4. Analysis of the Economic Contribution of Capitalism

This argumentative essay has focused on the contribution of capitalism in the economic growth and development of different global economies. The primary question that this essay has attempted to answer is “Is capitalism the driving force of economic growth and development?” In trying to explore this topic, counter arguments have been presented with diverse views and opinions about the question. The argument starts by exploring and outlining the concept of capitalism theory. Under this, the essay briefly introduces the background and historical foundation of capitalism. Adam Smith’s view on capitalism is briefly explored in this part. The essay also clearly defines capitalism and its economic relevance. In the history of capitalism, the surrounding economic applications are explored in this section. It further proceeds to identify the basic classifications of capitalism. Here, two capitalism classes are identified; social market and state capitalism.

The essay then proceeds to the main discussion, where diverse opinions are presented. In this section, different claims pertaining to capitalism and economic growth are presented. The presentation starts by looking at some of the contributions made my others scholars concerning the topic of discussion. The essay closely takes a look at the views and opinions earlier presented in support or against the research question. In particular, the essay focuses on the economic aspects of capitalism by identifying the contributions of capitalism to the economic growth and development. To explore this argument, the essay gives account of economic variables that have been victims of capital structures. The main ideas presented here include social and economic inequality, skewed wealth distribution, and violation of human rights.

In presenting this argument, the essay starts by exploring the history of capitalism with respect to economic variables. Adam Smith’s view that capitalism is detrimental to economic and social prosperity opens the account. According to Adam Smith, capitalism is a perfect bridge to inequality and disequilibrium in any economic set-up. The essay does not stop with Adam Smith’s argument. It digs deeper on facts and evidences to support this argument. Some of the claims and evidences presented in support of inability of capitalism to contribution to economic growth include inequality in income and wealth distribution, reduced productivity, violation of human rights, and social injustices. To support this theory, the essay has introduced a perfect example of capitalistic states, North Korea. Social and economic aspect of the Koreans is compared to those of Americans. The essay eludes these differences to violation of human rights, starvation, poor economic performance, and poverty; which are key indicators of capitalism.

To make the argument stronger, this essay has used exploratory techniques by involving a collection of theories about capitalism and citing practical examples of capitalistic economies. Some of the sentences that are used to building on this argument include socio-economic growth indicators and inequalities. In analyzing the evidence in support for the fact that capitalism is anti-economic growth, the evidences discussed in the essay were founded on accuracy and reliability of the source information. In addition, the essay ensures precision, clarity, equal representation, sufficiency, reliability of the discussion and expressions.

References

Goldberg, K. (2000). An Introduction to the Market System. Armonk, NY [u.a.: Sharpe.

Stackelberg, H., Bazin, D., Urch, L., & Hill, R. (2011). Market Structure and Equilibrium. Berlin: Springer.