Economic Concepts

EconomicConcepts

EconomicConcepts

Monopolyis a market situation which involves one single seller of a specificcommodity with no other close substitutes of the same commodity.Having been to a professional sports event, the event organizersensured that there was only one seller of ice cream and water. Beingin an open air, the temperatures had risen to a point where both theparticipants and the spectators, I involved, needed either water orice cream to quench the thirst. Prices of both water and ice creamwere very high, whereby the prices were above the normal marketprice. I buying a bottle of water, my impression was that I had notpair fairly for the water.

Sandler(2001) observed that in such a situation, the single or monopolisticseller of that commodity has total control and power over thecommodity’s supply and therefore, is in a position of influencingand the prices. I noticed that the high commodity prices were onlypossible because it was a professional sports event and that therewas no close substitutes.

Acompetitive market is that with a large number of producers. Theproducers compete with each other to satisfy large number ofconsumers’ needs and wants. Having to a number of supermarkets intown, all of them sell their products at a fair price as compared tothat of a monopolistic market. In one occasion, I went to threesupermarkets and the price of a cake was fairly the same. Sandler(2001) observed that in that kind of situation, no single or group ofproducers, and no customer of group of customers, are in a positionto dictate market operations. This is also because these individualscannot control prices of goods and amount exchanged. My impressionafter buying the cake in one of the supermarkets was that the priceswere relatively fair.

References

Sandler,T. (2001). Economicconcepts for the social sciences.Cambridge [U.K.: Cambridge University Press.