somebody stole my econs textbook
the verys expensiving economy textbook
as i left for math class
the said economics textbook
was laid on my extremely messy desk
and during that lesson my class was unful
and unlocked
when i returned
someone had performed a disappearing act on it
but had conveniently ran out of mana
to perform it on melvin's ipod
which was lying on his neat and tidy table
which was right beside mine
this brings me to the conclusion that a gep did it
and that the quantity supplied of the book is very low
which is the reason why the price is so freaking high
well since im on the topic of econs
i shall convey some of my thoughts here economically
pls note that all concepts mentioned
are fictional and should not be used to aid one in an examination situation
and that all comments are to be taken with a pinch of salt (or not)
Kenneth Khing
5.7 Ruth
Economics Internal Assessment
Market Structure
Tuesday, August 22, 2006
GIRLS IN ACS(INDEPENDENT)IBWS
In this extract, the firms and their product, as bizzare as this sounds, are the girls and the consumers are the boys, restricted to only within the Anglo-Chinese School (Independent) International Baccaulaurette World School.
The market structure of this particular industry is interesting as it is extremely ambiguos. In this essay, I will investigate this market structure and will provide, if any, suggestions to improve this industry.
The firms in this industry are small in sizes (not literally...) and come in relatively small numbers as compared to the amount of consumers. This inevitably means that there is a shortage of supply, which is the quantity of product a firm is willing to supply at any one time. This causes the supply curve to shift to the left as illustrated in the non-existant diagram that i cannot be bothered to draw. However there is not a high increase in price because the demand is highly price inelastic, which is the percentage change of demand due to a percentage change in price, as depicted by the fairly gentle gradient of the demand curve. Simply put, consumers are not willing to pay a very much higher price, which in this case is the willingness of the boys, to aquire these goods. This is due to the fact that there is an abundance of substitutes that can be acquired by consumers elsewhere. Also, the price inelasticity of the demand curve indicates that the goods produced are inferior goods and demand for these goods would fall as income, in this case ability to acquire substitues, of consumers increase. However to some consumers, there are a few dominant firms in the market as well, albeit very subjective.
Secondly, we see that barriers to entry are moderate. It is easy for firms to enter (or become) the industry. Certainly, there is no legal barrier to entry. Advertising is evident in the industry, but judging from the fall in demand, is not informative but rather persuasive and is yielding in fact, negative results. This is a strange phenomenon which sees not brand loyalty but brand hate surfacing in the midst of these advertisings. However the vast amount of capital required to purchase equipment (books), essential packaging (uniform) and government taxes (project 120) is perhaps a form of barrier to entry.
Thirdly, there is near perfect information. Information is spread rapidly across the market, and consumers quickly know when a product is available or not. This information also allows for firms to know what competing firms are doing. However, despite easy access to information, there is still the natural incentive for producers to invest in R&D (Research And Development) such as make up, pads and *ahem* enhancements. There is ability to invest in R&D as well, seeing how most firms are able to afford capital-intensive equipments, essential packagings and governments taxes.
Products shift invarialby and fluctuatingly between homogenous and differentiated. Homogenous because consumers cannot bear to look at many producers, which is emphasized further by the unflattering essential packaging. Products are also differentiated because, as mentioned earlier, there are few dominant firms in the market that produce unique goods. Indeed, even some homogenous producers produce unique goods, though they are often ignored and shunned.
Formal collusion is present in the market in terms of information. The rapid transfer of information between firms that occurs indefinitely allows firms to be aware of demand of the consumers. With this, producers are able to practise price discrimination, which is the disparity in price offered to a consumer under similar circumstances where the product would normally be priced at. Producers are able to raise the price to play hard to get or even lower it if these firms are in desperate need for revenue to recoup losses from their long-standing sub-normal profits. Dominant firms could even engage in 2nd degree price discrimination, which basically is the lowering of prices due to a purchase in bulk.
Therefore as can be seen, this market is not definable by conventional market structures. Instead, it is a market of its own and requires many assumptions to be made to assess this industry and many factors have to be taken technically. And especially technically. Hence, it shall be called technicpoly.
Currently, there are few feasible solutions to technicpoly but one such Welvin Mong has suggested to shape supply by murdering firms. Perhaps one could cause market failure in smaller firms and leave the dominant firms avaiable.
Word Count: TOO LAZY
