The Monopolistic Competition for Handmade Rugs

Running Head: THE MONOPOLISTIC COMPETITION FOR HANDMADE RUGS

The Monopolistic Competition for Handmade Rugs

Tanisha Holland

Dr. Anderson

Strayer University

The Business Enterprise BUS 508

Submitted November 1, 2009

Introduction

Monopolistic competition is a common market structure where many competing producers sell products that are differentiated from one another (Answers.com) Edward Hastings Chamberlin was the "founding father" of the theory of monopolistic competition, in his pioneering book on the subject, Theory of Monopolistic Competition (1933). Monopolistically competitive markets have the following characteristics: There are many producers and many consumers in a given market, and no business has total control over the market price; consumers perceive that there are non-price differences among the competitors' products; there are few barriers to entry and exit; producers have a degree of control over price (Answers.com).

History of Handmade Rugs

The first ever handmade rugs were made by nomadic tribes in Central Asia. Nomadic tribes used hand-knotted rugs as floor coverings, wall hangings, and curtains in their tents. Handmade rugs were perfect for a nomadic existence and were made on hand looms that could be packed up whenever the tribe moved to another location. The earliest known hand-knotted rug was found in 1949 in the Pazyrk valley in the Altai Mountains in Southern Russia. It had been frozen in a burial mound and was remarkably well preserved. Experts have dated the Pazyrk carpet to the 4th or 5th century B.C. (Hanassab Imports)

Factors of Production

Factors of production are the inputs which are used in the production of goods and services in attempt to make an economic profit. The four factors of production include land, labor, capital, and entrepreneurship

Land represents all natural resources that it takes to make the goods. In the making of handmade rugs natural dyes, wool, and cotton are used. A natural dye comes from...