Economics Report: Perfect Competition and Market Analysis

This economics report examines the concept of perfect competition, contrasting it with the real-world strategies of companies like Apple and Samsung. It begins with an introduction to perfect competitor markets and the role of finance directors. The main body of the report analyzes the market behaviors of Apple and Samsung, highlighting their departures from the perfect competition model. The report discusses how these companies focus on consumer needs, utilize technology, and set prices based on brand value and market segmentation. It then contrasts these practices with the characteristics of perfectly competitive markets, including price-taking behavior and ease of entry/exit. The report uses graphical illustrations to explain short-run and long-run scenarios within a perfect competition context. The conclusion emphasizes the relevance of market structures and financial decision-making in the context of Apple and Samsung. The report references several academic sources to support its analysis.

ECONOMICS
COURSEWORK

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................1

INTRODUCTION
Perfect competitor market is the market where all the product are identical and firms
are price taker and their share have no influence on price (Maradin, Malnar Đipalo, 2020). While
in the practical life this theory have no relevance on the companies like Apple and Samsung., .
MAIN BODY
Finance director are the senior executive member in the company with responsibility on
the financial heath of company. While the companies like Apple and Samsung have the different
view points from the perfect competitor market. Finance director of these companies have the
different prospector to look into the market. They found the need and satisfaction of consumer
wants and produce with the latest technology and equipments with the different price range of
their product. Apple is considered as the status symbol product for the consumers and in market
which give unique and luxury experience in their products like iPhone and iPads. Apple usually
charge high from the customer when it compares to Samsung due to its interface and technology
used in the product while Samsung charge low to their customer and provide different range of
product for low to high class people. Here this companies follows totally different from perfect
competition market as they own their different USP and experience to consumer and charge their
price with the brand value and technology used in the product (Rosenblum, Salomão Filho, Ido,
2019).
However, perfectly competitor market is the market where all firms are producing
identical products which are perfectly substituted and all the firms are price taker whereas other
market like oligopoly, Monopoly market and other market is that they can change their price
according to their way. Also, in perfectly competitor market firms can easily enter or exist in
market when it compares to others and no firms have control over the market.
If the market of is perfectly competitive then all companies should be complied with perfectly
substitute product and which also they are now price taker. These firms have no influence in the
market as they already have the many firms in the market. While they have to meet the customer
demand with the effective price in the market to attract customer. The best level of output of the
firms in market with short run is when the firms meet their market demand and market supply
which determines the market clearing price where average revenue is equal to marginal revenue
of the firms. Firm looks for maximize their profit by fulfil the consumer demand with the
product and overcome the cost of production of company. The price is set to be with demand of

the product in competitor market and cost of production is determined by technology they used
for the product. The below graph shows the P1 price of product offered by the firms and the
demand of goods in the market. In perfect competition market average revenue is equal to
marginal revenue, while at the point P1 is the best level of output for the firms. In short run
economic profit can be positive for firms.
Whereas, in the long run all input factor may vary which lead to enter in new firms and
exist of existing firms in the market as there are no barriers. When the existing firms tempt to
earn positive economic profit in the market, new entry of firm. These shows perfectly competitor
market is usually not change in long run. Long run impact their profit and economic profit shows
up ate zero where each firms will earn normal profits. Here, all factor inputs can be adjusted by
the firms which are also fixed in short run (Sethet.al., 2018). The firm reduces their output to
minimum point operation.
Illustration 1: Short run Curve

The above graph shows the Long run supply and profit maximization curve of perfect
competitor market. Where, point Q shows the output of firm and P is the minimum price of
product, average total cost of firm is equal to marginal revenue per unit and result in zero
economic profits. Firm is producing minimum level of output with minimum efficiency. When
the new firms enter the market, it results in increase in supply curve and decrease in price and
profit of the firms and many firms exist from the market.
Hence, Apple and Samsung are not the perfect competitor when it comes to decision-
making by financial director, this theory are not relevant in real practical economy where
companies are have changes their prices according to nature and other factor like brand name.
Apple has very key market in the economy which shows the status symbol of the consumer and
target only high income people in market and Apple have monopoly in their brand products
interface of product and technology they are using. While Samsung comes in oligopoly market
where only firms are providing those type of products and have the major of market in their
segment. Their financial director made different decision on the basis of market wants and
demand of consumer which was produce with the latest technology and giving the unique
experience through their devices. They have well-established in the market and have major of
Mobile phones and tablets in market which (Song, Wang, 2018). They are not the price taker in
the market and its very difficult to enter the market. Financial director decide the market price of
the product by analysis the market and economic condition with lot of research and development
by the team and using the latest technology. Apple and Samsung are one of the major industry in
auto mobile and provide the best technological products in the market.
Illustration 2: Long run Curve

CONCLUSION
This report concludes that Samsung and apple have their own different market which is
distributed with income. Apple focuses on high income people while Samsung provide their
product to all class of income. While deciding the business decision by financial director of
companies, all economy theory are not been considered in the real life decision which are based
on different situations.

REFERENCES
Books and journals
Maradin, D., Malnar, A. and Đipalo, E., 2020. The market structure of the smartphone operating
systems industry in the EU. Suvremeni izazovi EU, Republike Hrvatske i zemalja
Zapadnoga Balkana, p.209.
Rosenblum, D., Salomão Filho, C. and Ido, V.H.P., 2019. Emerging global giants: the legal
infrastructure and structural causes of economic monopoly: Samsung. In Global Private
International Law. Edward Elgar Publishing.
Seth, D., and et.al., 2018. Impact of competitive conditions on supplier evaluation: a construction
supply chain case study. Production Planning & Control. 29(3). pp.217-235.
Song, M. and Wang, S., 2018. Market competition, green technology progress and comparative
advantages in China. Management Decision.
Online
1