Assignment 4.2: Market Structure: Determinants and Power

This week, the concept of market structure is analyzed. Market structure concerns the amount of competition between firms in a market and how this affects the prices, outputs, and profits in that market. In the first lesson, competitive markets are examined. In the second lesson, markets with market power are studied. Market power is the control that a firm has over the price they charge consumers for a good or service.

Review a list of all items due this week in your course’s syllabus.

This lesson will identify the assumptions of the competitive market model and will describe equilibrium in a competitive market. We will analyze how price and quantity change in competitive markets. We also will describe the factors that change supply and quantity.

Learning Outcomes

By the end of this lesson, you will be able to:

State the assumptions of a competitive market.
Identify where market equilibrium will occur.
Identify factors that will change a market’s supply, demand, price equilibrium (P_e), and quantity equilibrium (Q_e).
Use graphs to analyze how various factors will alter a market’s supply, demand, price equilibrium (P_e), and quantity equilibrium (Q_e).

Before attempting to complete your learning activities for this week, review the following learning materials:

Learning Materials

Read the following in your Economics of Health and Medical Care textbook:

Chapter 8, “Competitive Markets” (pp. 133–153)

These pages provide additional references to the production function and other issues related to it.

Value: 15 points

Introduction

There are two parts in this assignment. You will need to develop one graph in Part I and a series of graphs for Part II.

Part I: Demand and Supply Curves

Table 4.1 represents supply and demand for a piece of medical equipment.

On the same graph, show the demand curve and supply curve for this piece of medical equipment.
Identify where the market equilibrium is on the graph.
State the P_e and Q_e for this piece of medical equipment.

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Part II: Changing P_e and Q_e

For this part of the assignment, you do not use the numbers provided for Part I. For each of the following situations, create a graph of

Assignment 4.2 Market Structure Determinants and Power

equilibrium in a market. Then, graphically show how each curve will shift. Indicate the direction in which each shift will occur. Finally, show how the P_e and Q_e are affected by each situation.

A good is a normal good and income increases.
Consumers expect the price of a good to be lower in the future.
There is a decrease in resource prices.
There is a decrease in the number of existing suppliers.

Table 4.1

Price	Quantity Demanded	Quantity Supplied
400	90	10
800	80	20
1200	70	30
1600	60	40
2000	50	50
2400	40	60
2800	30	70
3200	20	80

Submission

All the files that you upload should be named using the following convention: Last name_First name_Assignment_4.1.

Submit your assignment and review full grading criteria on the Assignment 4.1: Equilibrium Price and Equilibrium Quantity page.

Assignment Rubric
Criteria	Ratings	Pts
Responses	5 to >4 pts Meets Expectations Answers to all questions are correct. Graphs are all properly labeled and axes all properly identified. All graphs are properly drawn. (If applicable.) 4 to >2 pts Nearly Meets Expectations Answers to most questions are correct. Graphs are mainly labeled correctly and axes are usually properly identified. (If applicable.) 2 to >0 pts Does Not Meet Expectations Answers to most questions are incorrect. Graphs are not labeled or axes are not properly identified. Graphs are not drawn properly. (If applicable.)	/ 5 pts
Explanations	5 to >4 pts Meets Expectations Provides thorough explanation of rationales and skillfully applies course materials to develop conclusions. There is always a close and strong connection between the explanations provided and the material from the lessons. 4 to >2 pts Nearly Meets Expectations Provides adequate explanation of rationales, but conclusions could be supported more strongly using course materials. There is a connection between explanations and concepts from the lessons but this connection is not always strong or clear. 2 to >0 pts Does Not Meet Expectations Neither provides adequate explanation of rationales nor uses available resources to substantiate conclusions. There is no close connection between the explanations provided and the concepts given in the lessons.	/ 5 pts
Structure and Mechanics	5 to >4 pts Meets Expectations Contains one or two errors in grammar, spelling, and/or APA format. 4 to >2 pts Nearly Meets Expectations Contains several errors in grammar, spelling, and/or APA format. 2 to >0 pts Does Not Meet Expectations Contains many errors in grammar, spelling, and APA format.	/ 5 pts
Total Points: 0