Economics Internal Assessment

Alison Nathanson Chapter 17 Internal Assessment http//www. nytimes. com/2010/04/05/business/media/05screen. html? scp=10& vitamin Asq= moving pictures&st=Search Branding Comes Early in Filmmaking Process By STEPHANIE CLIFFORD 717 manner of speaking Monopolistic Competition is a market structure in which many another(prenominal) firms sell products that are similar but not monovular. It is a motley between monopoly, which is a firm that is the sole seller of a product without close substitutes, and perfect competition, which is a market with many buyers and sellers trading identical products so that each buyer and seller is a hurt taker.The picture show industry is monopolistically combative as there are many firms competing for the aforesaid(prenominal) group of customers, there is product differentiation, and free entry and exit. Anyone potbelly comprise a motion picture, yet it is the differentiations of each that allow for moviegoers to decide which ones they motiv e to see, and thence which ones depart gross the most money. In the yen run, monopolistically competitive firms see zero profit equilibrium. picIf one movie is making a hand of money, more movies are put into theatres to try and even out competition, or if one company is producing a destiny of movies, writers sell to other companies (new firms enter) and the pick out crape shifts to the left. If no one is watching the movies, firms loose money and the demand curve shifts to the right. collectible to these shifts, zero profit equilibrium occurs, as shown above, where footing equals average radical terms. In movies today, and always, companies catch made deals with movies in rder to be included in a film. This is all part of marketing, as for congressman companies think that if Brad Pitt is eating a Twix in a movie, the movie watchers are more likely to buy a Twix after the movie than to buy Snickers. The author stated that Now, having Campbells Soup or Chrysler associa ted with your get word can be nearly as important to your pitch as signing Tom Cruise. Having these name brands with your movie also comes with a lot of added benefits.The writer and director of the film Up in the Air got the hotel male monarch Hilton to sponsor his film for exchange of putting Hilton hotels in the movie. Thus, the movie got the added benefits from Hilton, much(prenominal) as the crew getting free lodging. In vagabond to maximize profit, peripheral revenue mustiness equal bare(a) cost. If you look above, you can see that at this point on the graph (MR=MC) price exceeds marginal cost. This is because price equals average total cost, and the downward sloping demand curve makes it so that at the profit-maximizing quantity of MR=MC, price (atc) is greater than marginal cost.For example, the marginal cost to the company of lodging for the crew is taken make do of through Hilton, yet there are other expenses that the company must purchase as well so that the ave rage total cost is equal to the price and zero profit equilibrium occurs. The cost of movies is sack up, and that really drives almost everything, said Jack Epps. In monopolistic competition, the long run always has zero profit equilibrium. So, if one firm kept the price of movies low, then their price would be below average total cost and they would have losses.In order to have a profit, price must be above average total cost, yet in monopolistically competitive firms price equals average total cost so this is not accomplishable in the long run. Unlike monopolies, monopolistically competitive firms do not have the ability to price discriminate, which is the business practice of selling the same true at different prices to different customers. They must charge the same price per movie to everyone. Therefore, they all need to produce where MR=MC in order to profit maximize, which actually creates zero profit equilibrium.The author stated that If you want to catch an executives at tention right now, its not just selling the script, but youre showing them how to create a brand. Movie producers want to have a name for them, so that they allow have an advantage over the many other firms out there. Due to the large number of sellers, and free entry and exit, firms that are monopolistically competitive will do anything it takes to differentiate themselves to their competition lets just forecast the differentiation produces some good film