Differentiating Between Market Structures Paper

Differentiating Between Market Structures Paper

The different market structures expand from one extreme of competition to the other. Firms must understand their products, their consumers, and their place in the market. Knowing this will allow for success in making all types of business decisions; especially decisions involving the correct levels of production and labor force to turn the most profit. This paper explains the similarities and differences between the different types of goods, and explains how the supply and demand of labor affects labor market equilibrium. Further, this paper evaluates the effectiveness of the oligopoly market structure that Ford Motor Company competes in, and how labor supply and demand is affected within Ford Motor Company.

Goods are classified in four ways as private goods, public goods, common resources, and natural monopolies. They can be excludable or nonexcludable and rival or nonrival. A private good is any good or service whose consumption by one person excludes consumption by others (Park, 2007b). Public goods are provided without profit to all members of a society, by either the government, a private individual, or an organization (Soanes & Stevenson, 2005). Common resources are not privately owned and are freely available to anyone who wants to use them (Park, 2007a). A natural monopoly occurs when a single supplier can provide a product at a lower cost than any combination of other firms (Cane & Conaghan, 2009).

A private good, such as a car, is rival because consumption by one person decreases its consumption by other people but is excludable because it is only used by the person who owns it. A public good, such as the National defense, is nonrival because consumption by one person does not decrease its consumption by other people but is nonexcludable because it is impossible to prevent a person from enjoying its benefits. To prevent The Free Rider Problem, a person receives the benefit of the good, but...