...sorry for the 4 years of waiting. Im sorry for falling for you. I'm sorry I did not open up much to you. I'm sorry for not doing the right things while I could have. I'm sorry Perfect Competition Perfect Competition and Assumptions Perfect competition is a market structure that in the long run produces allocative and productive efficiency. If all markets were operating with perfect competition then the best allocation of resources would occur for society. There are a few assumptions to perfect competition: * Firms attempt to maximise their profits * There are many participants in the market (buyers and seller), this is important so that no individual buyer or seller represents a large enough share of the market to influence the market price. The market price is therefore determined by the market (it is the equilibrium point). * The product is homogenous (identical, for example sugar or water), if the product had a brand that consumers identified with then it may be able to charge a premium for the brand recognition. * There are no barriers to entry or to exit the market * There is perfect knowledge of the market conditions, all buyers know the prices that firms are charging and therefore will purchase the good at the cheapest going price. * There are no externalities Perfect competition is a theoretical idea based on the assumptions stated above. It is very rare for a market to exist in reality that meets all the criteria and so very few markets can...
Words: 1260 - Pages: 6
...Journal of Management and Social Sciences Vol. 3, No. 1, (Spring 2007) 11-21 Applicability of the Theories of Monopoly and Perfect Competition -Some Implications Ravinder Rena * College of Arts and Social Sciences Eritrea Institute of Technology Gobind M. Herani * Indus Institute of Higher Education (IIHE) ABSTRACT This paper addresses the concern that monopolies arise naturally out of the free market. An attempt is made to compare and contrast two theories of monopoly economic and political monopoly that this is not true. This paper further demonstrates that the two theories of monopoly have their separate roots in two opposite theories of competition: perfect competition and competition as rivalry. Hence the paper discusses only one of these theories of competition accurately describes the nature of competition in an economy. Besides, the paper also delves the two theories of competition and monopolies are derived from collectivist and individualist political philosophy. It illustrates how perfect competition and economic monopoly have undermined economists' understanding of the actual nature of both competition and monopoly. After investigating these theories, an attempt to made to apply them to show how one can come to very different conclusions about when monopoly power does and does not exist. Keywords : Monopoly, Perfect Competition, firm, industry, government, egalitarianism, etc. 1. INTRODUCTION It is often claimed that a free market leads to large firms gaining...
Words: 6569 - Pages: 27
...SUMMARY OF PERFECT COMPETITION There are high requirements in order for perfect competition to exist. They are: 1. Many buyers and many sellers. Why? 2. Free entry (and exit). Why? 3. Perfect knowledge about prices and quantities for those in that market. Why? 4. Homogeneous product. Why? Who determines the price in a perfectly competitive market? -The market does. How? The demand and supply determine what the market price and quantity are. How large is the market? How large are the firms in it? -The market can be very large. However since there are many firms, each firm is rather small. They are small enough so that no single firm can affect the price; they must accept the market price. You mean to say that if I am the owner of a competitive firm, I cannot change prices? Who can tell me what to do, if I am the boss! -You will accept the market price. This is when you learn about the power of market forces. One option: You could lower the price and make less profit. Why lower the price, if you can sell your product at the market price. Second option: if you raise the price, your clients will go elsewhere since there are many competitors nearby who charge the market price. Therefore, you will not lower the price nor raise it; you will accept the market price. Perfect competition will keep prices reasonable and provide the markets with many choices of goods. When prices are reasonable, it means that more people can afford...
Words: 425 - Pages: 2
...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 - monopoly and perfect competition by following characteristics: (a) Number of firms in market, (b) Level of product substitution, and (c) Barriers of market entry. (a) Number of firms in market Perfect competition is an industry composed of a large number of sellers and buyers, means the...
Words: 2193 - Pages: 9
...The Perfect Employee James Surowiecki’s book Wisdom of Crowds explains how a group is more likely to think of the best solution or answer to a given task or problem than an individual. I choose the task of coming with up what the most important characteristic for a fellow employee should have. I choose to use my fellow co-workers to figure out the perfect solution. I believe that they will be very capable of providing me with the best possible answer. The reason why I believe they will be able to come up with a great answer is because they see fellow employees and they observe bad qualities and good qualities in a person. They will be able to choose the best quality and pick what the most important to obtain to be the most excellent employee quality is. [Deleted] My fellow employees being very different from one another it would allow me to keep the diversity in every persons answer. To me diligence and professionalism are some qualities a great employee has to have because no employer wants a lazy employee. So the employees need to prove that they are diligent. Professionalism varies across professions, but underlying it all is a desire to give your best in a recognizably competent fashion. Employees can also be very lazy at times, recharging your batteries but overall an employee should come out as a diligent person. Having balanced and reasonable expectations about an employer is also a part of professionalism. Motivation also is a very important to be the best possible...
Words: 1238 - Pages: 5
...Professor Scholz Economics 101, Problem Set #7 Costs, Adding Demand Curves and Perfect Competition Please complete work on sheet and SHOW your work! Problem 1 Posted: 10/20/2009 Due: 10/27/2009 The following chart represents the production function and cost curves for a firm. a) Please fill in the open squares given the information provided, and answer the related questions below. Assume that labor is paid a constant wage, i.e. our firm is a pricetaker in the labor market. Hint: use your definitions! MP L 0 --1 1 4 3 9 5 12 3 14 2 15 L 0 1 2 3 4 5 6 K 10 10 10 10 10 10 10 Q VC 0 4 8 12 16 20 1 24 FC 36 36 36 36 36 36 36 TC 36 40 44 48 52 AVC --4 AFC --36 2 9 ATC MC ----40 4 11 5.33 4.33 4 4 1.33 0.8 1.33 2 4 1.33 1.33 56 1.43 4 3 2.57 2.4 60 1.6 The following formulas can be used to calculate the necessary values for the chart. • • • • • • • MPL (Marginal Product of Labor) = (change in Q)/(change in L) In this case, labor is the only input that varies and we assume a constant wage. VC (Variable Cost) = L*wage FC (Fixed Cost) = TC – VC AVC (Average Variable Cost) = VC/Q AFC (Average Fixed Cost) = FC/Q ATC (Average Total Cost) = TC/Q or AFC + AVC MC (Marginal Cost) = (change in TC)/(change in Q) b) What is the relationship between ATC and MC, if ATC is decreasing as output increases? Specifically, can we tell if one is higher than the other? Why? When ATC is decreasing, MC is less than ATC. This is because the cost of producing each additional unit, represented...
Words: 2614 - Pages: 11
...1. The most common example of a market with perfect competition is agriculture. How could farm subsidies distort a model of perfect competition? Explain. In an ideal sense, agriculture is a prime example of perfect competition; easy entry and exit, homogeneous products, a large number of small firms, and open information of universal prices and technology used in the industry.The only other few markets that are perfect competition is the foreign exchange and internet auction industry. As agriculture maintains to be an industry that is the closest market to a perfect competition, farm subsidies tamper with the notion of having “a large number of small firms.”Although there are a large number of small firms, most of the subsidies that are...
Words: 1601 - Pages: 7
...* Special Purpose entities (SPE) used to move assets and liabilities off balance sheet * Enron was finance by debt. Also, had to buy off a potential hostile bidder, hangover from merger, which cost 350 million. By 1987, Enron debt burden was to be main struggle. * Enron open office in Valhalla to trade oil and petroleum product but failed because two employees unauthorized dealing and Enron loss $85 million. * Jeffrey skilling, Harvard MBA establish “gas bank”, a mechanism to provide funding for smaller gas producers to enable them to invest more in exploration and development and provide Enron with reliable source of natural gas to feed pipeline system. * January 1992 got 20-year deal contract with sithe $3.5 billion. The advantage was that knowing price of gas for early part of any project eliminated a major uncertainty and made easier to raise finance. * In 1994, Enron was operating power and pipeline project in 15 countries * To get round the problem of large number of small producers who lack of capital, Enron provided liquidity by prepaying long term fixed price gas supplies with the payment secured on the gas itself. They pay Enron in gas rather than cash. * After obtaining exemption, Enron began buying and selling electricity. The company was free to choose which part to operate not necessary be generator or transporter. One could source electricity from generators and rent transmission capacity. * Rebecca mark favored investment in traditional...
Words: 544 - Pages: 3
...MEMO FOR BRIDGESTONE BEHAVIORAL HEALTH CENTER To: Dr. Thomas Russell, Executive Director, Bridgestone Behavioral Health Center From: Sheryl Marshall, Managing Director, Service Consulting Plus Date: 7th September 2014 Subject: Analysis for decrease in financial performance Dear Sir, We really appreciate the services that your company is providing for the well being of the people. Bridgestone is doing a great work to help people tackle the problems that are faced by them and we thank you for choosing us to be part of your noble cause. Although the company is working effectively, it is not able to generate reasonable amount of profits. The profits it will generate in next year are also very small. But they can be increased if certain measures are taken and a check is kept on some factors which lead to decrease in profits. The company is appearing to be barely in breakeven, which indicates lower profits. The weighted average contribution margin percentage for the next year is 70% and the breakeven dollar sales for the company are $4,991,000. The anticipated sales for that year is $5 million and thus the company will generate $9,000 more from sales than what is required to breakeven. When margin of safety is calculated in percentage it turns out to be about 0.18% since the sales revenue is $5,000,000. This is very low and is the reason for the very low profit margin for the year. A high weighted average contribution margin percentage will decrease the breakeven point and...
Words: 725 - Pages: 3
...Advertisers arranging marketing campaigns make inquiries to support the chances that the messages will be acknowledged: Who is the intended recipient? What ought to be its substance? What distribution channel and method should be used? When promoting, timing is ostensibly the most critical variable of all. To be sure, there are times when individuals need to communicate quickly with a business because they experience unexpected changes. In these circumstances, if the company response in a timely manner, there is a good chance the company will receive a welcomed response from the customer. The question of "when" can be answered by a new computer-based model called "dialogue marketing, which is, to date, the highest rung on an evolutionary ladder that ascends from database marketing to relationship marketing to one-to-one marketing. Its principle advantages over older approaches are that it is completely interactive, exploits many communication channels, and is "relationship aware": that is, it continuously tracks every nuance of the customer's interaction with the business. As a result, experts contend that dialogue marketing serves an important role because it responds to each transition in that relationship at the moment the customer requires attention. Argues that it is relatively easy to convert a traditional marketing strategy into a dialogue marketing campaign. Here are a few thing the authors suggests: “Begin by identifying the batch communications you make with customers...
Words: 305 - Pages: 2
...Week 2 - Case A - Perfect Pizzeria 1. Consider the situation where the manager changed the time period required to receive free food and drink from 6 to 12 hours of work. Try to apply each of the motivational approaches to explain what happened. Which of the approaches offers the most appropriate explanation? Why? The manager’s retaliatory approach to lower the loss percentage was not a motivational factor for the employees at all when he changed the number of hours employees had to work to receive free food from 6 hours a day to 12 hours. Evidently the employees did not respect his authority as the change did not seem to have an effect on them nor did it give them any motivation to do better. These jobs where minimum pay jobs with little to no intrinsic reward or job satisfaction. He ended up with a high turnover in employees which in turn caused him to violate company policy because he lost key personnel and had to work in the food preparation himself until new hires were trained. 2. Repeat question 1 for the situation where the manager worked beside the employees for a time and then later returned to his office. During this time the employees seemed to become motivated by the fact the manager was not beyond working and doing the same tasks they performed each day. In other words, he was not presenting himself to be better than his employees and was not asking anything of them he was not willing to do for himself. This resulted in the percentage being low enough...
Words: 584 - Pages: 3
...The Perfect Modern Dancer Feet: The person who has amazing beautiful feet is Christina Ricuicci. In order to be able to get on a high releve, you must have flexible feet. Also as a dancer you are able to do more if your muscles in your feet are more flexible. Back: When you are dancing, you can make beautiful back extensions if you have back flexibility. Makayla Jacmacjian is one dancer who demonstrates the art of having a stretchy back. There are more tricks a dancer can do, and there are back extensions that you can hold better if you develop the proper back muscles. Hips: Having hip flexibility can benefit a dancer so much because they would be able to do more tricks, and it will make things like leaping, and kicking easier. You would be able to do more stretches than the average dancer can do and be able to make beautiful lines with your legs. Kalani Hickler is a dancer that has open hips and it is a tremendous advantage when she dancers. Core: Having a strong core is essential to dance because you have to have a strong core to be able to turn. There are a number of different kind of turn sequences but no matter how easy or difficult it may be having a good core is a must if you want to be able to turn. Sophia Lucia is able to do 64 solid pirouettes and she would not be able to do it without her core. Face: One of the biggest things about modern dance is being able to tell a story with your face. The dancer wants to portray a message to the audience and...
Words: 591 - Pages: 3
...Case 6 A: “Perfect Pizzeria, or Not?” Case 6 A: “Perfect Pizzeria, or Not” Case Summary Perfect Pizzeria is located in Southville, Illinois. Each operation has one manager, an assistant manager, and from two to five night managers. Employees were mostly college students, with a few high school students that usually performed less challenging duties. The Perfect Pizzeria system is devised so that food and beverage costs are computed according to a percentage. If the percentage of food unsold or damaged in any way is very low, the manager gets a bonus. The chain manager in the case is forced to make decisions in order to receive his bonus. The chain manager is tasked with trying to identify a way to reduce the waste percentage by motivating employees to not waste supplies. In the case study, the manager found that the more he retaliated against employees the higher the percentage became causing him to receive regular wages without the bonus. Apathy grew within the pizzeria as the relationship between the manager and workers further separated because the attempts to alleviate the problem began to make the percentages even higher. With high turnover and even higher waste percentages, management must find a solution to motivate employees to reduce waste so he can receive his bonus in return. Analysis Question 1: Consider the situation where the manager changed the time period required to receive free food and drink from six to twelve hours of work. Try to apply...
Words: 3912 - Pages: 16
...Perfect Position Vanessa Collins Perfect Position This perfect position paper will convey about my leadership style as a respected experienced employee. Because of my company’s expansion, and restructuring, I am given the opportunity to determine my position that will best suit me and will benefit the company’s’ success. In doing so I must define my leadership style, its strengths, and weaknesses through the use of the self- assessments that will aid in my identification. In addition, I will compare my method to leadership with the applicable leadership theories to identify occupations within my organization that best fit my style of leadership. Leadership style is an important commodity to or success, whether we are supervising team members on- the- job or providing guidance to a big cooperation. We each have our own style of leadership whether it is subconsciously or deliberately we will use a form or leadership in the workplace and in life. I believe that an effective leader is one who has the capability to recognize the characteristics that could assistance in influencing the group to achieve the company’s vision. Applying my leadership style to best suit my organization I must first my first clarify the organization’s mission, values, and ethical accountabilities. As leader, I will need to create an environment that is positive, motivating, creative and also professional one, so employees will be able to thrive, and grow as the company grows. The Prentice Hall...
Words: 1145 - Pages: 5
...gaining full knowledge of the dynamics of an entity is clear evidence that man is interested to fully utilize and dominate the world. Why else would someone make inquiries into something that will not be of help to them, and is already aware of it existence? Research is aimed at searching for a complete understanding of an existing entity known to man. However, every research conducted by man has been proved that there is no hope of doing perfect research (Griffiths, p97). I fully conclude with the observation of Griffiths. Martin Shuttleworth defines research as “… the definition of research includes any gathering of data, information and facts for the advancement of knowledge.” A perfect research would mean that the research with no doubt is a replica of the process and elements involved in the creation of an entity. Does the human being have the power to create replica of what they are not fully familiar? Research after research has been met with critic to explain errors, bias, faults and weakness of the research. If the research were perfect, there would be no existence of vocabulary such as random and systematic errors associated with quantitative and qualitative researches respectively. There are a multiple number of research that have had to be thrown to the dustbin, and some revised due to weakness and discovery of newer dimension and light in the entity that were being researched. Example one (high speed trains) China has unveiled high speed trains (with the ability...
Words: 779 - Pages: 4
