oligopoly-Kinked demand curve

oligopoly is a market structure dominated by a few firms.

Kinkes demand curve is a demand curve made up of two parts; it's suggest oligopolists follow each reductions, but not price rises.

kinkes demand curve can be used to explain why prices in oligopolistic markets are often rigid, or stable for relatively long periods of time. Price Rigidity is a condition where one follows a decrease in price but not an increase in price. This is due to the ability of other firms to match prices with it and it often leads to a kinked demand curve.

Attempt to stay at the same price which is point P shows the fixed price, and the output shows by the point Q. It is assume that a firm increase the price which is above point P , the other firms will not follow to increase the price because the oligopolistic market is non price competition. Therefore, when a firm increase the price the other firms will be able to sell more themselves, attracting customers from the firm that increased the price. Thus cause of this we know the demand is elastic to an increase in price. and it shows the firm's demand curve is AB and its marginal revenue is AC. Inversely, if the firm decrease the price, the other firm will follow, because if they do not cut the price, they will lose their market share for example, lose their customers. This is starts a price war, the result of which is likely to be that all firms lose out. The demand curve below B is inelastic, because it make a sense if the MC curve move up or down and the output will not change. While the marginal revenue curve is EF.

Monopoly

Monopoly is one of the market structure. A monopoly exists when single firm controls the entire output of an industry. The sole supplier of a good for which there is no close substitute.
The feature of monopoly

• single firm


• high barriers to entry


• no close substitute


• price maker
  

The firm produce the output at where MR=MC, charge price at P to achieve supernormal profit.
In competitive market, MC=AR price would be lower at Pc and output wold be higher than Qc. Net welfare for consumer is higher.

In a perfect market, the market equilibrim will be at point X where MC=AR, That's supply meets demand.n price at Pc and output Qc.


The disadvantages of monopoly:

• The monopolist is not producing at the lowest point of AC curve, though produce efficiency is not achieved, allocative efficiency is not achieved either since the price charged to consumers is greater than the marginal profit.
• consumer surplus is being reduced
• monopolist could be monopoly power to create barrier to entry and operate price discrimination.

the advantages of monopoly:

• Dynamic efficiency is being achieved in the long run. firms are able to invest, innovate and develop to protect market position.
• If monopoly benefits from economic of scale, long tun average cost is reduced.

comment of 5business ideas

1. I do not think this is a good idea because the cost of it is very high, and the market is not really good. To keep the fresh of these food in vendin machine is not very easy, they company who do this business need send staff to change the food on time. If the food not sold out, the food are waste. the consumer can not touch the food before they want to buy, they do not know whether the food is good or not, therefore consumer may change their mind to go to supermarket. However, it is very convenient to people who lives very far from market.

2.No firll gym, open 24/7

This is unique business idea, it will be attract a lot of people. Open a gym 24 hours per day and 7 days per week is satisfy lots of demand, because different people has their own different spare time. Sometimes, the gym close at 9 o'clock, for people who have free time before 9 o'clock is good, they can go to gym before it close, but for people who do not have free time before 9 o'clock is not good, because they cannot go when is too late. In another hand, if the capacity of this gym is so small, people will choose the time when they think is suitable, or after them work, they may all go the gym. So too many people will lead to overcrowded. So I think open a gym 24 hours per day and 7 days per a week is good, because it can satisfy more demand and it will encourage more people to join. Also the possibility of overcrowded will decrease. However, I do not think there will be a lot of people go to gym in the evening, because it is not really health to do exercises in night. So, some people may not want to go. the cost will be high as well, for example the electricity. Whereas it depends on different people.

3.Adjusting jeans for pregnant waistlines & back again

This is very attractive products for pregnant, because girls like wear jeans even though she is pregnant or not. Adjusting jeans satisfy the demand of prednant, it is very convenient and not really the out look of jeans. However, it is not very health that a pregnant to wear adjusting jeans, therefore for some of prednant they may prefer to wear other comfatable clothes in stead of atjust jeans.

4.wearable device tracks,fitness data 24/7

I think this products is not really suitable for now, because not every people want to take a small digital thing and record the sleeping time, or some other fitness data. It approciate people who like to know what these information. However. it is very convenient and really useful for some people, but I think it is very expensive as well. I guess it will be more demand of this product in the future becomes nowadays more and more people start to consider their health.

5.interactive piggy band teaches kids about money.

I really like this idea. Because it is good for children to learn the basic financial skills, make them recognise the importance of money. The main consumer of piggy bank is kids, it is very attractive, because children always like to copy the action of their parent, they will interested in how to save money in bank and willing to do it. Also this encourage them to save money, and their parent would like their children have this good habit. However, how to use computer is a problem for children, this is a new and difficult sill to them to learn how to use computer. Also some of children interested in this because of their curiosity, normally, kids can not keep their curiosity for a long time, when they stop to consider on this interesting project, they will stop use the piggy bank. Therefore, how to keep the kids use this bank it is difficult to the company.

Foldio

http://www.foldio.co.uk/index.php

Firstly I need to say Christin is a genius, he is 19 years old and just finished his A level course, but he ca running a business very well. Then I am thinking about me,,,,god....!!!!
Ok, Let's talk about foldio. This is a good products, because after I watched the Verdi, I visited the web side of this products. In this website they describe the advantages as :
1.Curves documents without a crease, creating a smaller, more functional portfolio
2.Paper doesn't curl, unlike cardboard tubes
3.Easy access to particular documents, unlike standard portfolios
4.Foldio holds paper, card, notepads, pens, books
5.Constructed from foam PP, Anti-worp system
6.Durable and comfortable handle
7.Affordable, high quality and stylish product
According to the advantages above, I think this is a good product, and they have a high market share.

marketing:
all the student can be the consumer of foldio. I mean all the student which include primary, secondary, high school and university school students. Because the supplier of foldio have different size of it, such as A1,A2,A3 and A4. This is good, because not only students but also other people,like business man. In another hand, foldio is not very expensive, for example the price of A4 is 19.99 and now is 16.99,this discount may because of the seasonal reason, now student start to go to school, they will think about to buy a new foldio, lower price is more attractive. If Consumer decide to use bulk buying, there will discount more. For instance if a university will buy 1000 foldios, there will be 5% discount of the total price. Also if you visit the website, you will see, the sale of foldio is good, because this reflect buy their sale record, for example, the foldio of A1 case is sold out. So according to the information above we can see the market of foldio is good. ( I think this is why when Christin face to 4 dragons he was very confidence)

Christin ask 80,000 pounds and 15% share to investment in the initial time. He said he will manufacture foldio with the 80,000 pounds. One of the dragon was interested in this product, and he would like to invest it , but the share for him is not very high, so he asked more than 15%share form Christin. Christin accept and increase the share from 15% to 35% which jump a lot.
I think accept this dragon's offer is right, because Christin can gain the invest and manufacture foldio. As we know the market for foldio is good, therefore the profit will be high, and Christin mentioned that he has experience of exports and impors with China, So he knows about the information of China, like the materials in China is very cheap. Therefore he can build the manufacture project in China which is cheaper and thus can save money and he can find a market in China as well. So in this comparesion, 35% share is not really influence a lot.

However, there are some risks of 35% share, because 35% is not a low share for a business. If a the competitors of foldio become more, the demand of foldio will be reduce, becuase consumer can compare the products and change their taste. for example lapdesk is one of the competitor of foldio, because both of them can keep the paper, but foldio do not have a mini desk which can help people writing everywhere. So if the market share decrease, and the marketing is more competitive the profit maybe reduce. Therefore if give the dividends to the investors with low profit, their will be loss of the profit . So depends on different situation.

Depreciation

balance sheet

I am sorry that I did not come today, because I feel really bad. However, I was read balance sheet at home and tried to understand it more clearly.

What is balance sheet actually is?
a summary of a person's or organization's balances. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year.

Balance sheet basis on balances
Assets= liability + shareholders equity
Owned=owed + investment

Assets
Current assets:
Assets that have life span of less than one year. Current assets include cash which you may have in hard cash(currency and coins), current, savings, and investment accounts, and other assets which are not cash is liquidity. Liquidity means how easily you can turns into cash. The second one is accounts receivable, it is how quickly will you customer pay you? How much is it really worth. The third part is stock(inventory), when we talk about stock, we need consider how quickly can you sell it? And again how much is it really worth. The forth assets is pre-paid expenses. For instance paid in advance for future benefits. E.g rent.

Non-current assets
Assets that have life span of more than one year and can be turned into cash in less than one year.
Non-current assets include fixed assets, such as machinery, computers buildings, land and tangible assets. (fixed assets value=original value-accumulated depreciation)

Other assets
There are good examples about other assets patent, copyright and goodwill and actually goodwill might the brand value, all of them are intangible assets.

Then let’s talk about liabilities
What are liabilities? Liability is an obligation of an entity arising from past transactions or events.

Current liabilities
Debts or obligation that are due within one year.
1. Bank overdraft/short term loan \
2. Accounts payable (creditors)
3. Accrued expenses. E.G payroll, interest( interest pay the loan), tax.
4. Taxes

Long term liabilities
Debts or obligations that due in more than one year e.g. Bank loans, leases.
1. Bank Loan

Equity (capital)& Retained Earnings

Equity- Investment from shareholders(paid in capital goes to current assets)
Retained earnings- Profit

easy way to understand what is diminishing marginal return

mind map