Introduction

            Does money make the world go around?  Answering the questions of how and who makes the money move will tell us if money takes on this task.  The market structures that define our economies around the world are perfect competition, monopoly, monopolistic competition, and oligopoly.  Comparing and contrasting types of goods and resources and marketing structures gives us the foundation of how our markets work together.  This paper will also define the labor market equilibrium and look at the labor supply and demand of a company named British Petroleum.  Let’s take a look and see how these different factors work to spin our world.  

• Compare and contrast public goods, private goods, common resources, and natural monopolies
• When comparing and contrasting public and private goods, common resources and natural monopolies it is necessary to determine the meanings of excludable and rival in consumption.  Excludable means “that it is property of a good whereby a person can be prevented from using it.”  (Mankiw 224)  Rival in consumption means that property of a good whereby 9one person’s use diminished other people’s use.” (Mankiw, 224)

In comparison, both public goods and common resources are goods that are not excludable There is no price attached to the use of these goods.  These are goods that everyone benefits from.  For example, any person at any time can use and have fun on Bureau of Land Management land such as four-wheeling.  In contrast common resources are rival in consumption.  By using some of the common good it prevents others from using it.  For example, when a hunter kills a deer, that deer is no longer available to feed someone else’s family. 

In contrast Private goods are goods that are both excludable and rival in consumption.  Private goods have to be paid for unlike public goods and common resources.  Natural monopolies are similar to private goods because they are both excludable.  However, a natural monopoly does not rival in consumption.  Natural monopolies are a monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.  An example of a natural monopoly is “a bridge used so infrequently that it is never congested.  The bridge is excludable because a toll collector can prevent someone from using it.  The bridge is not rival in consumption because use of the bridge by one person does not diminish the ability of others to use it.”  (Mankiw 314)

Explain how labor market equilibrium is affected by the supply and demand of labor

Companies that sell goods and services in the market of supply and demand are now part of a buyer’s market in the labor market. Companies need workers to make a product as well as design, sell, package, and distribute the product. The workers will not do the worker for free. They want to be compensated for there services. Companies need to enter the labor market to buy labor so they can afford the workers. Companies also need to determine how much labor they will demand.

There are some considerations in the labor that they may demand. This depends on what the buyers want to buy depending on the price and their needs or if the buyer really wants to purchase the product, or if the price is acceptable to the buyer. This will determine the amount of labor companies will need (Schiller. B, 2007).  So basically, the companies buy more labor. Then the companies need to buy the right amount of labor and make sure they are not buying too much labor (Schiller. B, 2007)

Select an organization with which you are familiar and identify the market structure of that organization. Evaluate the effectiveness of this structure for the organization.  For your selected organization, summarize the factors that affect labor supply and demand.

British Petroleum (BP) is one of the world’s largest energy companies it provides energy for heat, gas for machinery and operates gas station throughout the world. BP has become a giant in the gasoline market but it still operates in a competitive market. According to Principles of Economics, Firms in a Competitive Market, a competitive market is, “a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker.”

The gasoline market consists of many buyers and sellers and the goods being offered, (in this case gasoline) are largely the same. In this market the actions of one company does not have a large effect on the market price. For example, if the local BP increased its’ price for gasoline the result will be that buyers will simply drive down the road to purchase their gas at a cheaper price.  BP is quite effective while operating in a competitive market structure, given that it has grown into one of the largest oil companies in the world. As of 2008, BP operates 22,600 service stations. This is due to the markets rising demand for gasoline. As the demand for fuel continues to increase so does BP’s demand for employees and as of 2008 British Petroleum employs 92,000 employees.

Conclusion

From the lemonade stand on our neighborhood corners to the giant corporations there are specific market structures that define economies around the world.  Analyzing the labor market equilibrium shows the value of wages of labor when supply and demand factors are involved.  Supply and demand are involved in all market structures and dictate profit and loss for many companies.  When comparing the types of goods and services we can see which product benefits the economy monetarily, and which product is a resource that helps the economy achieve it’s potential.  Every economy has a mix of perfect competition, monopoly, monopolistic competition, and oligopoly to make money move around the world.  Money does make the world go around.

Differentiating Between Market Structures Table

References

Mankiw, N. (2007). Principles of Economics (4th ed.). Mason, OH: Thomson South Western

Information gathered from BP.com, History of BP.