We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Consider a perfectly competitive market in long-run equilibrium where all firms operate under the same cost conditions. Suppose - Essay Example

Comments (0)
Summary
Macro and Micro Economics [University] [Instructor Name] Question B: Consider a perfectly competitive market in long-run equilibrium where all firms operate under the same cost conditions. Suppose a new technology becomes available which reduces marginal production costs…
Download full paper
GRAB THE BEST PAPER
Consider a perfectly competitive market in long-run equilibrium where all firms operate under the same cost conditions. Suppose
Read TextPreview

Extract of sample
Consider a perfectly competitive market in long-run equilibrium where all firms operate under the same cost conditions. Suppose

Download file to see previous pages... (70 marks) Market is a place where buyers and sellers meet each other for fulfilling needs and generating profits. The form of market is of great importance in business and economics as it is responsible for defining its overall characteristics including the numbers and categories of suppliers, the variable or identical nature of the products offered by different firms operating in the same or different industries, is the market exhaustive enough or it allows the entry of some new competitor and most importantly the nature of the competition; is it a perfect competition or not? The major decisions of different firms revolve around these basic features which lead to the analysis of offering price and the number of inventory to be produced (McEachern, 2011). As far as perfectly competitive market is concerned then it has the following features: There is relatively quite a small number of sellers and buyers as compared to the needs of the customers and the overall market size. In this situation one firm has a very low effect over the market price and trends. As a result not a single firm can practice complete control over the cost and price ratios. The perfectly competitive market deals in identical products i.e. all the firms in the market sale the same product with minor or negligible variations. The customer choices are therefore independent of the quality of the product and other characteristics of the products excluding the price factor. The market forces such as demand and supply work freely to decide the equilibrium price and equilibrium quantity, in addition to this the government policies affect the price and quantity ratios through taxes and subsidiaries. There is a free entry for all the firms in the market. They can leave or enter the market in any geographical location without facing any obstacles in their way. They can also apply whatever factors of production they want to with whatever variations and manipulations. The market offers complete and comprehendible information about the products and services. Therefore the firms are aware of the quality and characteristics of their products which leads them towards better performance. It is an ideal market to work in as it ensures the profits and flexibility of operations. In addition to free will related to entrance and exit hence giving numerous advantages to the consumers and sellers both (Dodd & Hasek, 1952). Now let’s consider the example of Rice market where the competition is perfect in nature. All the firms operating in this particular market are having the same costing conditions which are expected to remain at the equilibrium stage in the long run as well. The Automation Technology has become available to few of the firms in the market. This technology is pretty much useful for the production and packaging purposes as it lowers the marginal cost per unit and therefore contributes in increasing the profit margin of the seller without the need of increasing the price of the commodity rather decreasing the cost of the product. The usage of the Automation Technology will have some short run and long run effects over the rice market whereas the factor prices and the demand of the product remain same. This will disturb the equilibrium state of the perfect competition. Application of some new technology is always beneficial for both the industry and the individual firms operating in the market as it is more effective and efficient than the previous ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
The nature of perfectly competitive markets
This paper deals with understanding the nature of perfectly competitive markets. Perfect competition means pure competition in a perfect market. A full market competition is an idealized form. In perfectly competitive markets, short-run profits are possible. However after the entry and exit of firms, a situation of long-run equilibrium results in zero profits.
8 Pages(2000 words)Essay
Perfectly Competitive Firms Versus Monopolies: Inability to Make Enormous Profits
It takes a number to years for a company to create a name in the industry and a specific brand that would catch a particular following in the market. However, despite the quality products and services, these companies may not be able to make enormous profits in the long run.
5 Pages(1250 words)Essay
Explain why Perfectly Competitive Industries are Considered to be Efficient in the Short and Long-Run
However, there are opposing opinions to create unrest. According to George Watson, “Monopoly favors the rich (on the whole) just as competition (on the whole) favors the poor.” (Fitzgerald, 1988) On the one hand, the economist voice about perfect competition and on the other, monopoly is talked upon.
6 Pages(1500 words)Essay
Current Market Conditions Competitive Analysis
Being the largest fast food chain restaurant in the world today with 32, 000 restaurants in 119 countries worldwide, McDonald’s set the bar so high and turned the competition so fierce. Hence, as an amateur in the field of food merchandising, it is highly beneficial to come up with a comprehensive, detailed, and clear-cut competitive market analysis of the world’s largest fast food chain.
5 Pages(1250 words)Essay
Perfectly competitive markets
Other factors that differentiate perfectly competitive markets from other market structures are easy entry and exit into and out of the industry (Welch & Welch, 2009). Both consumers and producers have perfect information availability regarding quality and prices of the products and there are no transaction costs involved in buying and selling of products.
6 Pages(1500 words)Essay
Perfect Competition and Long-run Equilibrium
It has been a matter of debate if the concept of perfect competition is valid or not. Criticizers believe that markets are always competitive to some extent but mostly they are under such a competition that they must be called as imperfectly competitive.  
7 Pages(1750 words)Term Paper
Explain why perfectly competitive firms cannot make supernormal profits in the long run but monopolies can
It makes truly perfect when the size of the firm is relatively small to the capturing market and all suppliers and buyers have good communication about the cost and
5 Pages(1250 words)Essay
Market equilibrium
If we consider the demand of homes in the market, income is a determinant since it lowers or increases demand for the commodity. High population will increase
2 Pages(500 words)Research Paper
Current Market Conditions Competitive Analysis_365
A marketing analysis is needed to analyze the profitability of this new product. According to the study of econPort there are at least six factors
1 Pages(250 words)Essay
Ompare the supply and pricing decisions of firms in both a perfectly competitiive and monomply market .explain clearly the assumptions made in each case. to what extent would you regard a local taxi firm as operating in a perfectly competitive market
et structure of a firm in a given industry influences the way the company conducts business and how pricing strategies and how to obtain the quantity supplied. However, pricing strategy and quantity supplied all affects profit maximization for the firm (Besanko, et al. 2011 p.,
2 Pages(500 words)Essay
Let us find you another Essay on topic Consider a perfectly competitive market in long-run equilibrium where all firms operate under the same cost conditions. Suppose for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us