ECONOMICS. Economics. 4/11/2019. ECONOMICS. 1. Q1 Perfe

Running head: ECONOMICS
Economics
4/11/2019

ECONOMICS 1
Q1
Perfect Competition
According to Antonioni and Rashid (2016), perfect competition defined as a market structure
where competition is experienced at the highest level. A perfectly competitive market is
comprised of a large number of buyers as well as sellers, along with zero cost of
advertisement
As stated by Agarwal (2013), to increase the profit in the perfect competitive market
structure, businesses involved in the market set equal marginal revenue to marginal cost,
which can be presented like (MR=MC). MR is said to be the revenue curve that is equal to
the (D) and (P) that is the demand curve and price. In the short run, it is conceivable for
economic incomes or profits to be negative, zero, or positive.
Source [(Lumen, 2019)]

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Monopoly Competition
According to Mosca (2018), Monopoly competitive market is said to be a structure of the
market that is categorized by a single seller, vending an exclusive service or product in the
market. In the monopoly market, there is no rivalry for the vendors as he/she is the single
seller of services or goods with no close substitute (Posner and Weyl, 2018).
Difference between Perfect competition and Monopoly Competition
 In a perfectly competitive market, there are a large number of sellers and buyers in the
market, but in the monopoly market, there is only a single seller but a large number of
buyers.
 According to Kumagai (2012), in the Perfect Competitive market, the offered
products are homogeneous but in the monopoly market, there is no availability of
close substitute product or service. Under the monopoly market, there is no
competition.
 It is generally said that companies working in a perfectively competitive market are
price takers and companies operating in the monopoly market are price makers.
 According to Mankiw and Taylor (2006), in the perfectly competitive market, there is
a well-organized distribution of resources and keeps the burden on the manufacturer
to maintain the cost of production down. In contrast, under the monopoly market,
there is a restriction of output, unproductive expenses, and higher production cost.
 According to Kamich (2010), Entry barriers are very limited under perfectly
competitive market whereas in the monopoly market there are barriers to the entry.
 According to Hoskins, McFadyen and Finn (2004), in the perfectly competitive
market at the equilibrium output, the price is equal to marginal cost, whereas, in the
monopoly market, the price is higher than the average cost.

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Supermarket and grocery industry of Australia is considered to be involved in a perfectly
competitive market. Companies like ALDI, Woolworths, and Coles all are involved in
offering a similar type of products with high price competition. The supermarket industry of
Australia is comprised of a large number of buyers as well as sellers (IBIS World, 2018).
Q2
According to DeMers (2017), in the digital age context, each year, the rise and fall of the
social media platform could be observed and all-encompassing variations to consumer
preferences that power the online marketing world to grow.
Economic Theory
Keynesian Economic Theory - Keynesian economics is said to be the theory according to
which the government must work on increasing the demand in order to increase the growth.
According to Amadeo (2019), Keynesians consider customer demand is the main dynamic
force in an economy. As an outcome, the theory provisions expansionary fiscal policy. The
key tools are spending of the government on infrastructure, education, and unemployment
benefits. A disadvantage is that exaggeration Keynesian policies upsurge inflation (Lavoie,
2014).
A characteristic origin of the antitrust laws is that they defend customers from monopolies,
conserving rivalry at the expenditure of the major, most prominent actor in a provided
market; however, it is always not the same case. In 2013, the United States District Court
Judge Denise Cote provided a judgment, in approx. 160 pages opinion, that Apple had
combined with total five biggest book publishers of North America in a system to increase
and fix the prices of e-book, impious Section 1 of the Sherman Antitrust Act. The one who
got the highest benefit due to this decision is Amazon, which is not the biggest but the most

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significant businesses operate in the technological world but also the leading business in the
bookselling. But, Apple announced that it will apply for the petition for the decision provided
by the coat. However, the decision announced by the court in 2013, ensured Amazon to be at
the ruling place in the predictable future (Buchanan, 2013).
In the year 2009, the market share of Amazon for the sales of e-book was around 90%, as per
some of the evaluations—a purpose of the success of the Kindle as the very first truly famous
e-reader and the willingness of the business to deal with the loss in the market of book to
increase its customer base. Another major factor that has forced the success of the Amazon
towards upward direction is its strategy of pricing which has major control over the market
(Buchanan, 2013).
Q3
According to Wiston (2009), Microeconomics is said to be the research of how businesses
and customers take decisions in the market and the way the government put efforts to address
situations that resulted in the wrong or bad decisions. And it has suffered any grim
intellectual hindrances from the present Great Recession. Certainly, the reasons and
treatments of this recession are about microeconomics.
Macroeconomists' hypothetical and experiential assistances have provided details regarding
the failures in the market do exist, but the government infrequently can be said to improve
those failures professionally. Nothing in the last few years has destabilized microeconomic
studies that prejudiced the airline deregulation, natural gas, telecommunications, cable
television, trucking, crude oil, and railroad.
With the recession, the sales and profit of the company decline, due to which the producers of
the products or services cut its investment in the hiring of new employees or it freezes the

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hiring completely. With the effort on cutting the cost and enhancing the bottom line, the
producer can also stop buying new tools and equipment, limit research and development, and
break new product development. Expenditure of the business on advertisement and marketing
of the services and goods also reduced. The efforts of the business over cost-cutting have a
major influence on other business, it can be big and small, which offer services and goods
utilized by the big manufacturer.
According to Wang (2008), as businesses get influenced by the recession, they invest less
money on market activities, due to these big organizations of advertisement, all feel the
squeeze. In turn, the decrease in the expenditures on the advertisement shapes away at the
bottom lines of huge media businesses in each partition which can be in nine, broadcast, and
print. As the influence of the recession wave through the economy, the confidence of the
customer also decreases, which eventually decrease customer demand spending.
Supply and Demand
According to Marshall (2010), the product or service price is one of the key factors in the
procedure of consumer decision making, but it is said that it is not the only factor and it is not
always the deciding factor. But according to the microeconomics principle, if all other factors
are equal, and the price of the service or product increases, the demand for the service or
product will decrease. Conversely, if there is a decrease in the prices the demand will
increase.
According to Bliss and Intriligator (2014), on the prices basis, the microeconomics can
predict with realistic accurateness what a customer can purchase, and the quality of the goods
will be purchased. Customer demand is what he/she desires at what quality is known as the
demand curve.

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Source [(Surbhi, 2014)]

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References
Agarwal, V. (2013) Managerial Economics 1st ed. India: Pearson Education.
Amadeo, K. (2019) Keynesian Economics Theory [online]. Available from
https://www.thebalance.com/keynesian-economics-theory-definition-4159776 [accessed 11
April 2019]
Antonioni, P., and Rashid, M. (2016) Microeconomics For Dummies 2nd ed. U.K: John Wiley
& Son.
Bliss, C.J., and Intriligator, M.D. (2014) Introduction to Equilibrium Analysis: Variations on
Themes by Edgeworth and Walras 1st ed. Netherlands: Elsevier.
Buchanan, M. (2013) The E-Book Conspiracy Comes to a Close [online]. Available from
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DeMers, J. (2017) 7 Online Marketing Trends That Will Dominate 2018 [online]. Available
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will-dominate-2018/#6f037d402c19 [accessed 11 April 2019]
Hoskins, C., McFadyen, S., and Finn, A. (2004) Media Economics: Applying Economics to
New and Traditional Media 1st ed. U.K: SAGE Publications.
IBIS World (2018) Supermarkets and Grocery Stores - Australia Market Research Report
[online]. Available from https://www.ibisworld.com.au/industry-trends/market-research-
reports/retail-trade/food-retailing/supermarkets-grocery-stores.html [accessed 11 April 2019]
Kamich, B.M. (2010) Chart Patterns 2nd ed. U.K: John Wiley & Sons.

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Kumagai, Y. (2012) Breaking Into the Monopoly: Provincial Merchants and Manufacturers'
Campaigns for Access to the Asian Market, 1790-1833 1st ed. Netherlands: BRILL.
Lavoie, M. (2014) Post-Keynesian Economics: New Foundations 1st ed. U.K: Edward Elgar
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Lumen (2019) Perfect Competition [online]. Available from
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[accessed 11 April 2019]
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EMEA.
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Mosca, M. (2018) Monopoly Power and Competition: The Italian Marginalist Perspective 1st
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Posner, E.A., and Weyl, E.G. (2018) Radical Markets: Uprooting Capitalism and Democracy
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2019]
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