Maximizing Profits Within Different Market Structures

Maximizing Profits within different Market Structures

ECO 419 Applied Economics in Business

University of Phoenix

October 10, 2011

Microsoft has been a leader in the computer technology and software industry since 1975. Nearly every home and office in the United States has used Windows or some form of Microsoft as a computer operating system.

“Windows & Windows Live Division ("Windows Division") develops and markets PC operating systems, related software and online services, and PC hardware products. This collection of software, hardware, and services is designed to simplify everyday tasks through efficient browsing capabilities and seamless operations across the user's hardware and software” (Microsoft Corporation, 2011, p. 1)

Moreover, Microsoft continues to find innovative ways to maximize profits and remain relevant in the world of constant change.

Differences between the Market Types

The four basic market types are: Perfect Competition, Monopoly, Monopolistic Competition, and Oligopoly. The amount or lack of control in a particular industry is the existing difference between the market types. Within a perfect competition market, businesses have a small amount of market power or none at all. The Perfect Competition market has a large number of fairly small buyers and sellers that sell a standardized product. In contrast, Monopolies have total control of the market. One benefit of being in a monopolistic market involves unique companies offering a unique product or service whereby there is no competition. Moreover, an Oligopoly has similar control of the market based on product differentiation. An oligopolistic market involves a small number of companies whom offer the same product and control the market together, unlike a monopoly. Likewise, in a Monopolistic Competition several companies control the market and compete for the market share among customers. “In terms of market power, monopolistic competition and oligopoly...