Friday, April 26, 2019
Economics Essay Example | Topics and Well Written Essays - 250 words
Economics - seek ExampleIn an oligopoly market structure there are a limited number of firms direct in the marketplace. In the market structure in which cut through operates the barriers of entry are high (Amosweb, 2011). This is champion of the reasons why there are a limited number of participants in the auto application. One of the major barriers of entry is capital. It takes billions of dollars to create the infrastructure necessary to become an auto maker. The learning curve to become economical at producing cars is long, thus experience is extremely important. The price elasticity of demand in the auto industry is medium. Customers care about price, but there are lots of other features that add value much(prenominal) as reliability, warranty, luxury, and performance which ultimately determine the price point of the automobile. A strategy Ford has employ in the last couple of years is introducing hybrid vehicle models. One of its best selling models is the Ford Fusion H ybrid. The economic profits in an oligopoly market structure depend on the other players (Answers, 2011). For practice when one company has clearance sales, other firms follow and implement similar strategies. Players in oligopoly markets such as Ford have power over their suppliers. References Amosweb.com (2011). Oligopoly and Monopolistic Competition. Retrieved March 7, 2011 from http//www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=oligopoly+and+monopolistic+competition Annual Report Ford Motor (2009).