Market Model Patterns of Change Instructions Essay

Market Model Patterns of Change Instructions - strain ExampleMarket Model Patterns of Change InstructionsThe production of crude oil by the perseverance especially, in USA has introduced a large distributor to the total petroleum in the global economy. Meanwhile, it is a non-renewable ability substance that stub be extracted from the world after a certain period and converted into useable fuel. Therefore, the equipment casualty of the petroleum is obtained by the demand supply mechanism around the world economy, and slight dearth of petroleum can affect its demand and supply of other possible industries in the market. According to Galbraith (2001), when the monopoly personnel is practiced by an exertion at a moment in time, and the degree of monopoly fluctuates, the intentness particularized product price will also change. In case, the pattern of change through time can be the indicator of comparison and disparity in economic performance in the petroleum industry. The pet roleum was an example of monopolies to be affected in anti-trust action by the US government, and resulted into development of smaller companies. The industry expanded by increasing sales and undertaking major acquisitions, and after buying competitive industries in the market, the industries shut down those believed to be inefficient and kept the most powerful. The industry has involved in the discriminative practices in order to have monopoly power over pipe lines. It also applied unfair practices of acrid local prices at the point where the competitors were severely affected. Technological changes bring the pattern changes in the firm because it is frequently simple to outsource both service and manufacturing to distributors in other countries. The increased competition promotes the pressure of industry to attain lower units be as a means of maintaining market sh be. Finally, the nature of the industry backup patterns has undergone importance changes in order to have permiss ion to issue licenses and permits in distributive trade market. short and Long-Run Behaviors of Monopoly An industry with monopoly market model is considered to have price sort outting power, and it will strive to adopt high levels of profit (Galbraith, 2001). However, the industry is limited by the position of its demand curve that means monopoly cannot set price that clients cannot afford. Petroleum Industry is the sole supplier in an industry, and it takes market demand curve as its own demand curve. Therefore, it faces a downward sloping comely taxs (AR) curve with a marginal revenue (MR) curve twice the gradient of AR (McEachern, 2011). In the monopoly, there is optimum firm determined by long run profit maximization in relation to the market. According to McEachern (2011) the short run average total cost curve is tangent to the crosswise, and long run average cost curve is unceasingly at its minimum point. In the short run, if the demand for the petroleum products is hi gh, the industry will increase the price and the quantity of the products. The industry can achieve this by increasing output by employing more wear upon and raw materials, but cannot change the fixed plant. According to McEachern (2011) the long run industry curve is horizontal because when demand increases, raising prices and profits for monopoly industry. As a result, there is an increase in supply prices, thrust prices back down to original in the level in the long run, so that the profits are zero. Therefore, the shifting demand and supply curves trace out a horizontal long run industry supply curve. Areas for the Industry That Could Lead To Transaction Costs There are various transaction costs that the petroleum