Market Structures and Cost Management

Market Structures and Cost Management

• From the scenario for Katrina’s Candies, determine the appropriate type of market structure for the situation in question. Cite at least four (4) defining characteristics that have helped you reach this decision regarding the appropriateness of the chosen structure.
• Imagine that you are a manager of a chemical company. An accident has occurred in which chemicals leaked into the ground water nearby. The community is unaware of the accident. Compare the primary costs involved in cleaning up the water immediately (and thus confessing) versus hiding your culpability now and possibly paying more in the future. Predict the impact on profitability in both situations.

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The perfectly competitive market is the type of market structure that best suits Katrina’s. This is a market where a large number of firms compete against one another. An individual firm in a perfect competition type of market is a price taker…