...1. A perfectly competitive market has the following characteristics. (i) The market consists of buyers and sellers who are price takers. (ii) Each firm in the market produces undifferentiated and homogenous products. (iii) Buyers and sellers have perfect information about the price prevailing in the mark! About the availability of commodities at any given point of time. (iv) Firms can enter or exit the market freely. Implications: The implications of all these features is that there is single price in the mark no individual buyer can change it. On this price a firm can sell any amount of output. Because of flu demand of a firm is perfectly elastic and hence a horizontal line at the market price. Another implication is that a firm will produce only when it is profitable to produce, otherwise it will stop the products. * Characteristics of a Perfectly Competitive Market * The Law of One Price * Price Taking Behavior * Free Entry * Accounting vs. Economic Profit * Marginal Revenue * The Firm's Short Run Supply Curve * The Shut Down Price * The Short Run Market Supply Curve * Short Run Perfectly Competitive Equilibrium * The Firm's Long Run Supply Curve * Long Run Perfectly Competitive Equilibrium * The Long Run Market Supply Curve * Pecuniary Effects * Economic Rent * Producer's Surplus 1. Perfectly Competitive Market Characteristics of a perfectly competitive market/industry: * Numerous buyers and...
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...Perfectly Competitive Markets A firm’s decision about how much to produce or what price to charge depends on how competitive the market structure is. If the Dangote cement raise their prices by 5%, there will be a small reduction in the quantity of cements demanded. If the conoil gas station raises its gasoline prices by 5%, there will be a huge reduction in the gas demanded. In a very competitive market like the local gasoline market, a single station has very little choice in what price to charge. If the station is busy there is no reason to lower the price, but if it raises its price by 10 cents a gallon, it will have almost no customers. We will study the extreme case of perfect competition, where firms are “price takers.” In a perfectly competitive market, (i) there are many buyers and sellers, so each buyer or seller is a price taker, (ii) all sellers supply the same, identical product. This is the model of supply and demand. If a seller could influence the price, it would not be acting according to a supply curve. In the long run, we also require that (iii) firms can freely enter or exit the market. Revenue of a Competitive Firm For a competitive firm, the price it receives does not depend on the quantity it chooses to sell. Marginal revenue equals the price of its output. For example, if the price is $6, then the total revenue of selling 10 units is $60 and the total revenue of selling 11 units is $66. Marginal revenue, ªTR/ªQ = (66-60)/(11-10)...
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...perfectly competitive market.’ Discuss. 1b) In May 2009 Intel was fined a record amount by the EU for predatory pricing. Assess how easy is it to conclude that Intel undertook predatory pricing? Contents I) 1a) ‘A firm would prefer to b a monopoly, rather than be involved in a perfectly competitive market.’Discuss-------------------------------P/1-P/5 1) Market Environment---------------------------------------P/1-P/2 2) Profit Maximization----------------------------------------P/2-P/5 3) Benefits on Research & Development -------------------P/5 II) 1b) In May 2009 Intel was fined a record amount by the EU for predatory pricing. Assess how easy is it to conclude that Intel undertook predatory pricing?----------------------------------------------------------------P/6-P/8 III) Reference & Bibliography---------------------------------------------P/9 Business Economics Assignment (UBNo.: 09034262) P/8 1a) ‘A firm would prefer to be a monopoly, rather than be involved in a perfectly competitive market.’ Discuss. A monopolist has sufficient control over the services or products its provides in determine significant terms in order to maximize profits. This is directly contrast a firm operating within perfectly competitive market. To a large extent, a firm would prefer to be a monopoly. If a firm can be a monopoly, they can have following three advantages over doing business in perfectly competitive market. 1) Market Environment The best way to compare two extremes market structures...
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...Competitive Markets Economy Competitive Markets Economy A market which converges all of below assumptions is called perfectly competitive market: ''Assumption 1. All the firms in the industry sell an identical or homogeneous product. Buyers of the product are well informed about the characteristics of the product being sold and the prices charged by each firm. Assumption2. The output of each firm, when it is producing at its minimum long-run average total cost, is a small fraction of the industry's total output. Assumption3. Each firm is a price-taker. This means that each firm can alter its output without significantly affecting the market price of its product. Assumption 4.Each firm must passively accept the existing market price, but it can sell as much as it wants at that price. Assumption5..There is freedom of entry and exit, which means that any new firm is free to enter the industry and start producing if it so wishes, and any existing firm is free to cease production and leave the industry. Marginal cost and marginal revenue in the perfectly competitive market where all firms operate under the same cost conditions, marginal cost is considered as the most important factor after price that affect the supply curve, and firms that cannot adopt the lowest cost methods of manufacturing are hard to maintain in this market. The goal therefore of all firms is to maximize their profits which increases as long as marginal revenue...
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...1. What are the characteristics of a perfectly competitive market? What are the implications for accounting profit in a perfectly competitive market? What about economic profit? Perfectly competitive markets are characterized by low sunk costs, perfect information, no entry or exit costs, no search costs, identical products and an infinite numbers of sellers. In a perfectly competitive market there are many firms and many buyers, all of which are price takers, meaning they have no control over prices. As price takers, firms face a highly (perfectly) elastic demand curve, meaning that they can only change revenue by changing the quantity produced. Firms in a perfectly competitive market will produce where MR = MC. Since firms are price takers, MR = Price. As a result, when marginal cost is equal to marginal revenue, it is also equal to price. If firms are realizing positive economic profits, other firms with similar cost structures will have an incentive to enter the market: one competitive firm’s economic profits indicate that production of that good is more profitable than any other available allocation of resources, causing other firms to invest. Once new firms enter the market, there is an increase in the MARKET, or AGGREGATE supply which will change the price that individual firms face, causing a reduction in the price. Firms will enter until economic profits are zero, at which point the intersection of the price and the marginal cost intersects the minimum of...
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...reputable for offering the best online products and games as well as maintaining excellent service in terms of support and delivery of products. CanGo is a target for those customers, especially the Gen X and Gen Y people who as we know would find great fun in online games and entertainment. However, like any other form of business, competition has been commonplace in the online shopping and gaming industry due to the rapid growth and expansion in this sector. This can be a threat for CanGo with the onset of more gaming stores recently. This paper is a market research and analysis on the state of the online shopping and gaming market in regards to market size, trends, demographics and potential. It also observes the status of CanGo’s competitors in various segments of the market and several competitor’s services and product offerings have been examined in relation to that of CanGo. Analysis of online shopping and gaming market As technology continues to take shape, E-commerce continues to advance and people are getting drawn into the sector. This is...
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...Market Conditions Competitive Analysis Taze Vega ECO/365 October 20, 2014 John Bayer Market Conditions Competitive Analysis Factors Affecting Variable Costs Variable costs, as defined by Collins Dictionary of Economics (2006), are production costs that can change depending on the amount of output. Variable costs in manufacturing soft drinks would be packaging, labor (overtime costs), energy usage and raw materials. Of these, raw materials such as sugar used in making the product would be the cost that varies the most. The Law of Supply states that if the demand of an item rises then the price of that item will also rise (Colander, 2013). Therefore, if the demand for sweeteners were to rise then the price of raw materials would also rise. This would increase the cost of manufacturing the soft drink. The cost of productivity and labor would rise if for some reason the demand for the coke product was to rise also. The reason for this is that to fulfill the rising demand, Coca-Cola would have to increase the amount of employees working which would increase the cost of productivity due to energy usage and labor costs. Factors Affecting Fixed Costs According to Collins Dictionary of Economics (2006), fixed costs are production costs that do not change and are not affected by the volume of activity or the quantity of production. Some examples of fixed costs are rent, overhead and payroll. There are factors that may, at times, affect the changes of fixed costs. These factors...
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...Nike Shoe Company ECO 365 July 21, 2014 Alan Beideck Nike Shoe Company Introduction The current assembling practices of the shoe business, specifically organizations, for example, Nike, Reebok, Adidas, Converse, and New Balance, happens all through the world. With the business encountering extreme rivalry, and the item obliging concentrated work, firms are confronting amazing weight to build their overall revenues through their sourcing practices. The accompanying paper will dissect the tennis shoe industry, while inspecting the huge number of reasonable assembling alternatives, and scrutinizing their current assembling structure. Nike presently delights in a 47% piece of the overall industry of the local footwear industry, with offers of $3.77 billion. Nike has been assembling all through the Asian district in excess of twenty-five years, and there are in excess of 500,000 individuals today straightforwardly occupied with the creation of their items. They use an outsourcing technique, utilizing just subcontractors all through the globe. Their dominant part of their yield today is created in manufacturing plants in China, Indonesia, and Vietnam, however they likewise have industrial facilities in Italy, the Philippines, Taiwan, and South Korea. These manufacturing plants are 100% possessed by subcontractors, with the dominant part of their yield comprising singularly of Nike items. Nonetheless, Nike does utilize groups of four ostracizes for each of the huge three nations...
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...HOSPITALITY SERVICE FOR A NIGHT WITH RANCE ALLEN 1. Know the menu. Know the ingredients in the dishes so you can help those with dietary restrictions or answer any questions. Ask chef Tiffany questions about the dishes. Chefs are proud of their cooking and are typically happy to offer knowledge you can pass on to your guests. 2. Pay attention. No one wants to wait 20 minutes to get their first drink. Be aware of who is seated in your section, and if you are busy when a group sits down, briefly greet the guests and explain that you will be back promptly. Bring food out when it is ready and hot. Anticipate each guest's needs, such as needing another drink or a condiment, before they have to ask you for it. 3. Act friendly and be helpful. Each table of guests will be different. Some may want to engage in long conversations with you, while others may just want to get their food. Pay attention to their demeanor and responses. If they seem uninterested in conversation, be brief but polite. 4. Offer suggestions when necessary. If another waiter's guests need something and ask you for it, be polite and get it for them. You are there to serve people; being rude and unhelpful is not good for you, the event or the guests. 5. Enjoy your work. If you love your job, people will notice that. Have fun interacting with your guests and show enthusiasm for the food and the event. If the guests see you are having fun, they will in turn feed off your energy. A huge...
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...Firms Strategies to Stay Competitive in the Market Table of Content ......................................... -2- Introduction ................................................ -3- Differentiation Strategy ................................ -4- Benefits & Challenges of Differentiation Strategy .................... -5- Apple ..................................................................................... -6- Low Cost Strategy ................................................................... -7- Benefits, Challenge &Mistakes of Low Cost Strategy ................ -8- Interview .............................................................................. -11- Conclusion............................................................................. -15- In the beginning, I would like to explain the major problem that is associated with economy in the whole world which is scarcity. We know that humans are greedy and they always want more of everything, so that is why we have the problem of not having enough resources to all people. Firms try to satisfy their customers by thinking of strategies that can make their customers satisfied and to stay competitive in the market. Looking from this perspective, I would like to introduce my topic about Firms Strategies to Stay Competitive in the marketplace. Firms can remain competitive through a lot of planned strategies. Being a competitor in the market requires constant monitoring of the...
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...Current Market Conditions Competitive Analysis ECO/365 Bill Gates and Paul Allen made a company called Microsoft in 1975. They were computer fanatics that had a idea for personal computers. Microsoft then established itself into a household name. The marketplace for the personal computer became a actuality with the dream and hard work of Microsoft. Our group has been selected to be a part of a strategic planning team at Microsoft. They are the worldwide front-runner in software, services and solutions that support individuals and companies to realize their full potential ("A History of Windows", 2014). Microsoft is thinking about developing a new TV line. The marketing director directed our team to do a competitive market analysis and figure out the TV’s possible success. Our analysis will include an emphasis on Microsoft’s primary challenger (Sony) in the TV market. This report will look at the company as it relates to the current market settings and as it pertains to Microsoft concerning the marketplace structure, knowledge, price elasticity of demand, and participants. Tec-view vs. Sony HD Television Microsoft has developed a new television that will be an all in one component called Tec-view. This product will take the place of your computer and various digital devices while maintaining the expected functions of a television. Microsoft has brought superior upgrading to the line of visual experience. The competitor Sony HD television, is also working...
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...Current Market Conditions Competitive Analysis Apple, Inc. is a multinational. Their leading product is a smartphone called the iPhone, which began selling in the early 2000's. It has made them billions of dollars over time because their cost to manufacture the phone is less than what they can charge to sell the phone to consumers. Apple is known to have expensive products, but their products still have a high consumer demand. In this paper, we will discuss Apple Inc. competitive market analysis. Company History Apple Computers Inc. was founded back in April, 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne. Their main goal was to develop and sell personal computers. Since then, Apple has become more than a company that just sells computers. They have now broadened their line of products to phones, music purchasing software, MP3 players, televisions and even a form of payment. Later in 2007, they changed their name to Apple, Inc. It reflected their shift from a personal computer only to consumer electronics. After Samsung, Apple is the second largest information technology company, according to revenue. In March 2015, they joined the Dow Jones Industrial Average. Their iPhone has revolutionized the cellphone industry. It's operated by Apple's operating system iOS. Since its debut in 2007, the iPhone has had eight generations – starting with the first generation model and its current models, iPhone 6 and 6 Plus. With each new model, major changes were made to...
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...Current Market Conditions Competitive Analysis ECON365 Current Market Conditions Competitive Analysis Companies spend extensive amounts of time, money and resources when exploring the creation of a new product or service. It is imperative that companies thoroughly research the market, the demand, and what consumers want. To best determine the potentials of this new product, it is important also to understand the existing and potential competitive market, explore different opportunities or issues that the company could face, and consider the factors that could affect the cost of producing the product. Company History Samsung was founded by Lee Byung Chul in 1938 in Taegu, Korea as an export trade company selling to nearby countries. During the 1980s, Samsung devoted more focus to its electronic division and began introducing products such as DVD technology, computer technology, and many other electronics as well. (Kovach, 2013) In 1983, Samsung Electronics evolved. It was not until 1999 when Samsung would make their mobile phone division the most profitable part of the company by releasing their first internet ready phone. Over ten years later, they released the first version of their flagship Android phone, the Galaxy S. (Kovach, 2013) Product History Since the original model hit the scene in 2010, many new versions have been released in the Galaxy S Series cell phone made by Samsung. (Kovach, 2013) The Galaxy S series is best known for its sleek design, its complex...
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...Current Market Conditions Competitive Analysis Brian C. Cassidy, Jenna Tanner, Carla D’Amato, and Courtney Goddard ECO 365 April 13, 2015 David Copeland Norcross IV Introduction Ben & Jerry’s ice cream is a favorite and beloved American treat throughout the United States and 33 countries around the globe. Since Ben & Jerry’s are focused on providing a delicious and wide variety of flavors, they have recently decided to expand their products and develop and introduce a new product onto the market. In doing so, a strategic planning group has been gathered to conduct a series of analyzed to organize their strategy in the development of the new products. This will involve a comprehensive market analysis, as well as analyzes of supply and demand and variable costs that are involved in the development and marketing processes. This paper will discuss the history of Ben & Jerry’s and analyzes their product that are required to determine the product’s potential success. Background Ben and Jerry’s, (Ben &Jerry’s Homemade Holdings, Inc.) is an American dairy company. Ben Cohen and Jerry Greenfield founded the company in 1978 in Burlington, Vermont. Ben and Jerry met in 7th grade gym class, in 1963. Both men moved together to Vermont. While living in Vermont the young entrepreneurs decided to attend a correspondence course in ice cream making, at the Pennsylvania University Creamery. With a $12,000 investment, Ben and Jerry opened their very first ice cream parlor...
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...GameStop.com. (GameStop, 2011) The key to GameStop’s success lies in its ability to differentiate its products and services from its competitors. GameStop has been so successful at differentiating its products and services that it has become a trend-setter in the video game retail industry, resulting in other industry giants emulating its business strategies. One of the key components of differentiation that garners the company a competitive advantage in the marketplace is GameStop’s buy, sell, and trade program. Through the program, the company sells used games that are purchased from customers at a discount in exchange for store credit or currency. The program creates value for customers by offering them a low-cost alternative to purchasing new games while GameStop receives a substantial profit from reselling used copies of games at a higher price than they were purchased from customers, thereby cutting purchase and transportation costs involved in acquiring inventory from publishers and developers. This service differentiation gives GameStop a competitive advantage in the video game retail industry by allowing it to receive higher profits than its competitors who traditionally purchase inventory at higher costs directly from publishers. Additionally, the program increases sales to customers because GameStop is the only retailer that allows customers to trade-in their video games for discounts on new games. GameStop is the pioneer of this program and its success hasn’t gone unnoticed...
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