Question

Select an industry or firm. State its market structure (pure competition, monopoly, monopolistic, or oligopoly). Next, please define the characteristics of the industry or firm that support your selection of market structure Lastly, describe and illustrate graphically the firm's profit maximizing behavior in particular MR-MC under the above-mentioned market structures or conditions.

must follow apa guidelines

Answer 1

Answer:

Ford Motor Company, headquartered in Dearborn, Michigan is an American multinational automaker. It was founded in the year 1903 by Henry Ford. The company sells automobiles and commercial vehicles under the Ford brand. It sells luxury cars under the Lincoln brand. Moreover, it sells Commercial Vehicles, Automotive parts, Pickup trucks and SUVs also. Its immediate competitors are General Motors, Mercedes, Honda and few more companies. It sold 6 million vehicles in the year 2018. And the services it provides are Automotive finance, Vehicle leasing and Vehicle services. Adding further, Its revenue was US$160.33 billion in the year 2018. It has about 175,000 employees and more than 65 plants across the world.

Oligopoly Market Structure

The market structure in which Ford operates is the Oligopoly market.

Characteristics that makes automotive Industry oligopoly are hereunder:

The market in which this industry operates can only be categorized as an oligopoly and that is for a number of reasons which shall be listed in the following paragraph. The first reason that makes the automotive industry oligopoly is that each of these larger companies holds enough power/domination to sway the market price but not to the extent of removing competition so they have all become interdependent upon one another; a hallmark of oligopoly. The second reason is that while each of these manufacturers holds a significant market share, significant enough to affect market prices, they do not hold enough individually to be considered a monopoly. A third reason why this automotive industry is oligopolistic is significant barriers to entry: until and unless a new company has enormous resources, there are entry barriers for it to operate in the automotive arena. The fourth reason that the automotive industry is an oligopoly is that the manufacturers have some control over their output in order to exert control over market price.

Equilibrium under Oligopoly Market

Cost & Revenue AR 'MR output

In order to determine equilibrium 2 conditions are essential

1. MR=MC (for equilibrium output)

2. MC curve should cut the MR curve from below (for equilibrium price)

In the above diagram equilibrium output is OL where MR=MC and equilibrium price is OD afetr considering AR ( Demand Curve).