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Perfect Competition: Are Conditions More Favorable for Buyers or Sellers?

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Added on  2020-04-01

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Another advantage is that there may be maximum possible of consumer surplus and economic welfare.Consumer surplus is the situation where the price of consumer pays less than they are supposed to pay while economic welfare is the total benefit available to society from economic. ADD REPLY TO THIS ANSWER (MAKE FURTHER COMMENTS OR THOUGHTS) Noteworthy, perfect competition is the ideal market structure for any economy due to the significant benefits to both consumers and producers.

Perfect Competition: Are Conditions More Favorable for Buyers or Sellers?

   Added on 2020-04-01

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Economics For Managers 1Economics for Managers NameInstitution
Perfect Competition: Are Conditions More Favorable for Buyers or Sellers?_1
Economics For Managers 2Question:6.3 Are conditions in a perfectly competitive market more favorable for the buyers or the sellers? Explain your answer. Answer: Perfect competition is a model that can be used for a benchmark against other real-lifemarket structures. Agriculture is a prime example of a perfect competition. Although due tomarket spending money on R&D the market has gained advantages in certain parts of theworld. In my point of view, buyers are the one who has the most benefit from the perfectcompetition. The benefit of perfect competition firstly is they allocate the resources in a mostefficient way which means that both productively and efficiently in the long run. Also,consumers charged at a lower price when they consumed the goods and so consumer also getthe advantage. There is no information failure and all knowledge Is shared equally withinthem as they have a perfect knowledge, in addition, less advertising is needed and no barriersto entry is made so firms that exist cannot derive any of monopoly powers. Anotheradvantage is that there may be maximum possible of consumer surplus and economicwelfare.Consumer surplus is the situation where the price of consumer pays less than they aresupposed to pay while economic welfare is the total benefit available to society fromeconomic. In the Australian supermarket industry, a price war is an ongoing example of thesupermarket trying to create perfect competition. Since the arrival of Aldi in Australia, thestrategy of both big supermarkets has changed over the years how to keep their customer.Woolworths tried to compete on its fresh campaign and still does while as Coles tried tocompete on its efficiency. But at the end of the day battle is stuck on home brand productswith cheapest possible prices. That is an indicator for me that perfect competition will
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Economics For Managers 3eventually benefit the consumer. In my point of view, I don't think its sustainable way ofmoving forward in current world scenario. ADD REPLY TO THIS ANSWER (MAKE FURTHER COMMENTS OR THOUGHTS) Noteworthy, perfect competition is the ideal market structure for any economydue to the significant benefits to both consumers and producers. For consumers,with perfectly competitive markets, there’s wide consumer choice, free informationflow, and consumer welfare is achievable. Moreover, producers enjoy marketefficiency and allocative efficiency which is ideal for making profits. Affordableprices. Moreover, in perfectly competitive markets, firms are price takers whichmake consumers enjoy relatively affordable prices. There's free entry of firms inand out of the market thus promoting competition. However, I think, consumersare the highest beneficiaries of perfectly competitive markets since their welfare isguaranteed under perfectly competitive market structures.Discussion forum 7.3Why does your textbook Chapter 8 advise you to “consult the Yellow Pages” or search the internet, in monopolistically competitive markets? Answer:The texts suggest using the yellow pages or search engines to discover monopolisticcompetitive markets as it easily shows which markets have many competitors all supplyingsimilar products in a given locality. For example looking up the lawn mowing services in any given postcode in Melbourne canreturn up-to 100+ hits. They all provide a similar service, their overhead costs are all very
Perfect Competition: Are Conditions More Favorable for Buyers or Sellers?_3
Economics For Managers 4much the same and each can easily exit or enter the market with little to no barriers. Thepricing in the lawn mowing market are as you would expect with a monopolistic market,there are neither price-setter nor price-takers. Some charge more than others as they mayhave brand recognition and loyalty (Jim's Mowing) while other smaller companies set priceslower to attract customers away from the large market shareholders.ADD REPLY TO THIS ANSWER (MAKE FURTHER COMMENTS OR THOUGHTS)Noteworthy, it’s easy to locate academic materials and quote them for referencepurposes from the internet than yellow pages. Through the yellow pages and internet, itis easier to physically locate monopolistic competitive firms. Further, the use of theinternet is a fast updated global search engine thus the reason why its use is advocated.Nowadays, the use of the internet is wide and acceptable as a source of academicresearch and materials. Further, both the yellow pages and internet are advertisingtools thus the ability to clearly identify monopolistic competitive markets. Due to thefact that yellow pages are updated annually, the internet is more reliable as comparedto yellow pages. Also, yellow pages offer fragmentation of the monopolistic competitivemarkets as opposed to the internet. Discussion forum 7.5Explain the statement “prices act as a rationing device”.Answer: Pricing enforces the ratio between supply and demand – it acts to balance demand to the available resource. An increase in price will reduce the demand for the item in a normal market whereas a reduction in price will increase demand. Therefore a movement in price hasthe effect of rationing a certain control over consumer’s desires.
Perfect Competition: Are Conditions More Favorable for Buyers or Sellers?_4

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