This writing will focus on markets that are perfectly competitive in nature. This writing will focus on various characteristics of perfectly competitive markets and how buyers and sellers behave in such markets. The first section of the assignment will focus on the reaction of sellers to changes in demand for their goods and services. The second section of the writing will compare and contrast the characteristics of a perfectly competitive market with the characteristics of New York Stock exchange (NYSE). Body According to the law of demand when the demand for a product increases, the price of the product even elevates and vice-verse. Due to these changes in demand the marginal revenue that is being earned by a particular industry even alters. In order to analyze the changes that organizations in a perfectly competitive market experience as a result of changes in demand for a product, let us assume that the product being sold is bread. Let’s assume that according to research, eating brown bread helps individuals in preventing diabetes. Such revelations positively impact the demand for particular product. Let’s assume that the bread industry is a perfectly competitive industry and is currently experiencing long-run equilibrium at a price of $1.7 per loaf of bread and the value of the economic profit is equivalent to zero. Figure 1 Figure 1 is a depiction of short as well as long run adjustment experienced by a firm as well as market under perfect competition. The figure shows that in case of market the price of a loaf of bread is $1.7 when the quantity demanded for the product is at Q1 and in case of an organization that sells loaf of bread the market price of $1.7 is the organization’s marginal revenue which is at MR1. The figure shows that currently there is only one organization in the market. Since the new research suggests that there is health benefit of brown bread, the demand for brown bread increases which is depicted in figure 1 through a shift in the demand curve from D1 to D2. Due to this increase in demand, there is an increase in the price of the product and the price of the product elevates from p1 ($1.7) to P2 ($2.3) and this leads to an increase in the marginal revenue of a single firm operating in a market from MR1 to MR2. Due to this increase in price, the organization even increases its output from q1 to q2 in order to meet consumer demand in the short run (Douglas, 2011, p.615). Notice that the shaded region represents the economic profit that is experienced by the organization in the short run and similar profit will be experienced by other firms in the market in the short run. Since the market is perfectly competitive in nature and there are no barriers to entry or exit, the high stream of economic profit will attract more organizations to enter the market so they can even earn the profits being offered by the recent increase in demand. New organization s will enter the market and this would lead to an increase in the quantity supplied by the entire industry as more and more organizations will enter the market, more and more supply will elevate. New entrants will continue to enter the market as long as their entrance is resulting in an economic profit. Figure one depicts a shift in the supply curve from S1 to S2 which is a reflection of more firms entering the market. Due to this increase in supply, the price of the loaf of bread will start declining in the longer run
Name Perfect Competition Introduction A market is a place where buyers and sellers meet each in order to exchange goods and services. There are different kinds of markets and these markets are differentiated on the basis of their characteristics…
A market structure is the type of market that an economy chooses in order to assist in its decision-making. “The extent and characteristics of competition in the market affect choice behavior among the actors.” (Baumol, 1961, p.142) This means that economists are more concern on the attitude of buyers and sellers in the market and then conclude which market structure would be best for a certain economy.
For instance, people make choices about what goods to produce, how to produce these products and the target market or consumers of these products. Normally, in straight economics, these questions are answered by the market demand and supply. However, in market conditions in which no particular player has the power to influence prices, every player determines the price of goods and services.
For example, production of wheat and sale of the same in the market is an example of perfect competition. The producer produces wheat for sales but is bound to accept the market price for selling the product. In this paper, the demand-supply equilibrium will be determined.
The perfect market is a market which offers the highest competition and the least concentration. The least competition and highest concentration, on the other hand, is present in a monopoly market. The prices of the products and services in a perfectly market is driven by the benchmark prices set by the market.
The study would be reflecting the competencies of domestic as well as international leaders. It would highlight the similarities as well as dissimilarities in these two forms of leadership by comparing the leadership behaviour in some selected countries i.e.
About three decades ago, employees were people who were there in the company to work and receive wages at the end of the day or the month. Much focus was on production and achievement of profits without taking into consideration the concerns, ideas, opinions, and general welfare of the employees.
Commonly, economists of the 20th century explain the meaning of entrepreneur as the one who is always eager to take the risk of launching a new project forecasting its scope of earning maximum profit. It is worth mentioning in this context that there are certain special features in a successful entrepreneur, which make them different from others.
Rodrigue, J. (2013) stated “The most important transport problems are often related to urban areas and take place when transport systems, for a variety of reasons, cannot satisfy the numerous requirements of urban mobility. Urban productivity is highly dependent on the efficiency of its transport system to move labor, consumers and freight between multiple origins and destinations.” Congestion or increased density of population paved way for pollutions of various kinds in cities.
This tool is quite useful given that it helps in the understanding the level of competitiveness and the direction the business is headed. With clear knowledge on current situation, it is possible taking advantage of business’ strength and adopts mechanisms to improve on weakness.