Trade

I．Oligopoly

Mobile phone market have consisted of a few companies such as orange,vodafone,virgin mobile.The mobile market is a oligopoly market,so it exists large barriers to entry and exit.In the case,the price of the virgin mobile can rarely be changed and at the same moment it can only use non-price measures to attract more consumers.Because this company is created not very long,it can not use much more advertisements.The new company is not so stable as orange,vodafone and so on.On the other hand,the vigin mobile can earn supernormal profits in the long run.

ii. the relation of output and the price in oligopoly

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If the price of the vigin mobile is too high more than G point from the table,then other mobile companies stay stable.The customers will like to go to other companies,and the demand will be lower.If the price of the mobile is too low below G from the table,the other companies such as Orange,Vodafone will lower the price less than the vigin mobile.Because the Virgin Mobile is the new firm compared with the competitors.So the price must be at point G.G is the best price(P) and will bring the best output(Q).

iii.Perfect Competition characteristics

This market structure exists large numbers of buyers and sellers.And the entrants don’t need to have much more conditions.Nearly everybody can entry this market easily.

iv.perfect competition curve

The curve of perfect competition is perfectly elastic demand curve.In this curve,the price is equal to the AR(average revenue) or MR(marginal revenue).The price1 from the table is the market price.If the price is higher or less than price1,the demand will be at zero.In a word,the price1 is the best price.The curve MC and curve MR intersect at point Q1.when MC is equal to the MR,the output will be the best.So the best output is at point Q1.

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V.the profit two roles

The profit in the case has two roles.The profit is the incentive that encourages them to take risks.The profit is rewarded to Richard...