Explanation will be given how the perfectly competitive firms response due to changes in consumer demand. Another market structure is Monopoly. In monopoly market there is only one seller in the market. The differences between the characteristics of the two markets will be discussed. In this paper, brief explanation will be given for different types of market structure. Main Body Perfect Competition Demand –Supply Equilibrium The equilibrium is a situation where the market demand is equal to the market supply. This means for a particular industry, the market demand will be equal to the market supply. Suppose the Pizza industry is providing the same supply of Pizza as compared to the demand for the product. In case of market equilibrium, there is no pressure for price change because both the consumers and producers are satisfied in this situation. There is neither excess supply in the market nor excess demand in the market (Machovec, 2002, p.19). In the above diagram, the equilibrium has been shown by the interaction between demand and supply curve. P is the market price and Q is the quantity demanded. Market will produce OQ amount of output and the consumers will demand the same amount of output. So the price will remain same. Due to changes in any of the factors, the entire equilibrium position will get affected. It would result in either excess demand or excess supply. In perfect competition, the firms are price takers. In the short run equilibrium for perfect competition, the price is determined by the demand –supply equilibrium. P1 is the market price and each firm follows the same price. As the price is same for each unit sold the AR curve will be constant and it will be equal to the MR curve. At, MR=MC the firm maximizes its profits. In the following diagram, the profit maximizing output is Q1 and the market price is P1. The firm’s profit is shown by the shaded area. The firm earns supernormal profit because AR is more than AC. Super Normal profit In short run, there are three situations existing in the market. Super Normal Profit: When average revenue is greater than average cost (AR>AC) the firm earns super normal profit. In case of super normal profit, the existing firms earn high profit so the other players will also try to enter into the market. When the new players cut through the competition the firm again starts to earn normal profit (McEachern, 2006, p.43). Normal Profit: When Average Revenue is equal to Average Cost (AR=AC) the firm earns normal profit. Loss: When Average revenue is less than Average Cost (AR
Exam Paper Table of Contents Introduction 3 Main Body 3 Conclusion 11 References 12 Introduction Perfectly Competitive market is a market where there are many buyers and few sellers. No single seller or buyer can influence the price of the market. Perfectly competitive market deals with the homogenous product…
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.
Market types include: perfectly competitive markets where there are several buyers and seller, oligopolistic markets where there are limited number of sellers and monopolistic markets where there are only one to two sellers. In some markets, the sellers are price takers, while in other markets the buyers are price takers.
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.
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.