ASSIGNMENT | What type of market structure was the product or service in when the differentiation occurred?

Write a short (2-3 page, double-spaced, typed) essay identifying and describing the conditions you observed for a business in Monopolistic Competition or a Differentiated Oligopoly who differentiates their product. Your paper should also provide brief market analysis including the state of the market before and after the differentiation, as well as the observed changes that resulted. Specifically, the following questions should be addressed:

What type of market structure was the product or service in when the differentiation occurred?
What is the differentiation? Describe specifically what the differentiation was and tell us what that means for rational business price and production decisions.
What was the observed change in the equilibrium price and quantity in the market, as well as the company?
Evaluate the result of the observed change from perspectives of efficiency and equity drawing upon price/cost margins for your explanation.
Evaluate whether the decision to differentiate the product was a good move for that business at that time.

Evaluate whether the decision to differentiate the product was a good economic decision for that business at that time. That is, were economic or normal profits realized as a result?

SAMPLE SOLUTION

One business in a differentiated Oligopoly market is Apple Inc. The company specializes in the design, development, and sale of computer and mobile phone hardware and software, consumer electronics and internet services. Apple is in an oligopoly market since the barriers to entering or exiting its market are very high, and there are very few similar firms in the market (Sexton 414). The company highly differentiates its products to attract more customers. The iPhone smartphone is a highly differentiated product manufactured by Apple (Sexton 48). The uniqueness of…