Case study Microeconomics

Case study about market structure!

The observations which I have made about the market structure from different analysis are

Question #1:- Naming the market which I have selected? Ans: - I have chosen the market which is beer market having the market structure of
oligopoly and oligopoly is the study of market in which there are small numbers of dominant seller focusing on product differentiation to compete.

Question#2:- Discussing how many sellers and buyers are there in market? Ans:- According to observation seven sellers are there producing two types of premium
beers and bottled beers . The over all market is 60% in Vietnam. The estimation on bottled beer is making up the 79% Of the market and 21% of premium market. 30% consumers consume to home and 70% from restaurants or in other words the larger number of buyers is from restaurants and households consumers.

Question#3:- How market is isolated? Ans:- According to the observation or the information given(the beer market in
Vietnam) as holding firms three out there ,two of them holding the beer market which is reignited in Northern Vietnam having the highest market share in this region. The other one is based on southern Vietnam.

Question#4:- The barriers exist or types of barriers exist in market and how strong
they are? Ans:- the barriers are existing in beer market in Vietnam according to the in formation given two types of barriers are existing in beer market which are Brand loyalty and economies of scale . The brand loyalty actually prevents the competition in Vietnam among the beer market. Markets are not able to bring their products in the market because the particularly it has captured the beer market that the other product could be sold out. In Vietnam on beer market three producers each having the sufficient sales to achieve economies of scale but new firms having small market share they can not do that might wont survive further.

Question#5:- The level of knowledge in the market? Ans:- The level of knowledge in Vietnam of beer market is quite high because
information is given covering the 70% consumption in restaurants and 30% in home consumption product differentiate is a hurdle for new competition to enter as of knowledge availability there is enough knowledge available for beer market in Vietnam.

Question#6:- What is the type of produce differentiation in the market? Ans:- basically differentiation is the difference between or among the products but in
economics or in management its the difference between or focuses on features about seven major companies are producing beer but the product is differentiated into two ways. The first one is mainstreamed bottle beers which makes up about 79% of market and the second one is premium beers which makes up on estimation of 21% of market such as consumer focus specific brand in Vietnam situation so that is also product differentiation in the beer market in Vietnam and that is why market are also focusing in brand differentiation.

Question#7:- Are there any cost leaders in the market? Ans:- According to the information given I dont think so there is any cost leader
because each firm having enough space to control its price over output because product are differentiated and there is low competence because they are operating on particular regions and also the brand loyalty is one the main factors which prevent the entry of new firm to compete with each other and the price s are not the pointing concern but the brand which make the profit of the company.

Question#8:- What is the short run goal of the firm? Ans:- Basically In oligopoly market structure the short run goal of a firm is to maximize
its profit. In economic term the about short run goal is that where at least one of the inputs or factor of productions remain or keep constant. Supposing if we take two factor of production on a particular productive purpose such as labor and capital but at least we take one of is fixed, mean to say in the short run we will not adopt all input into production and especially in short run the fixed cost is constant and will not alter as output increases. Secondly the fixed cost in shot run is greater then zero( fC>0). And firms also try to balance their marginal revenue and marginal cost. MR=MC

Question#9:- What type of profit earn in long run and why? Ans:- In oligopoly the long run , market earns earn abnormal profit due to long range
of economies of scale and barriers which prevent new firms to enter in market and existing firm enjoy an abnormal profit. And if there is low level of barriers to entry than new firms will enter and there will be somehow a competence in the market such as southern Vietnam is trying to enter in central and northern Vietnam and in that situation the profit will be normal for firms.

Question#10:- What is the most likely graphical representation of your chosen

market? Ans:- As oligopoly having two ways geographical representation but as we havent gone through that so location and shape of an oligopoly demand curve depend on how the one firm reacts to a price change introduced by other firm.

LAC

Long run LAC curves of oligopoly the shape of curve shows long range of economies of scales.

Question#11:- What types of incentives for innovation exists in your chosen market
and why? Ans:- Yes the oligopoly is the market structure where the innovation takes place because the level of production expends ,the level of advance technology and also promotes the growth of a states economy that leads the high standard of living.

Thank you