Perfect competition is rare in the real world‚ but the model is important because it helps analyze industries with characteristics similar to pure competition. This model provides a context in which to apply revenue and cost concepts developed in the previous lecture. Examples of this model are stock market and agricultural industries. Perfect competition describes a marketplace that no one participant can set the market price of an exchangeable product. This is generally considered an ideal‚ rarely
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Question 3 Perfect Competition and Monopoly (a) I. Explain perfect competition and monopoly market structures‚ and identify the key factors that distinguish them. Perfect Competition Market In economic theory‚ the perfect competition is a market form in which no producer or consumer has the power to influence prices in the market. According to the website wordIQ.com‚ in order to classify the market is a perfect competition market‚ the market must match below criteria: 1. There
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Equality and Inequality Under Perfect Competition The mythical world of perfect wage equality Under certain very strict assumptions‚ a perfectly competitive market will lead to perfect equality of wage rates. All workers will earn exactly the same. These strict assumptions are as follows: All workers have identical abilities. There is perfect mobility of labor. All jobs are equally attractive to all workers. All workers and employers have perfect knowledge. Wages are determined
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Question 1 Perfect knowledge There is perfect knowledge‚ with no information failure or time lags. Knowledge is freely available to all participants‚ which means that risk-taking is minimal. Consumers have all readily available information about prices and products from competing suppliers and can access this for free which means there are few transactions costs involved in searching for the required information about prices. Homogenous products Homogenous products basically means identical
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entirely. One business cannot gamble on what they think their competitors might do with any accuracy. Firms are often both buyers and sellers in the marketplace and are faced with the same competition for inputs as are others. It can also be said that larger firms have more resources for innovation and fear of competition fuels this activity. So‚ are oligopolies always bad for society? I would have to say no‚ there are of course cases that are bad but not always. Part b. Again by definition as cited
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has the ability to change the market equilibrium price based on their own behavior. This means that there must be many buyers and many sellers. Everybody is a price-taker‚ which means that they must accept the market price. The stock market has perfect information. Everybody knows what their own choices are‚ and they know everything about the product. The buyer is capable of knowing what amount of marginal utility they will receive from consuming a product‚ and they will also know the amount of
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One of the key determinates to a successful national economy is the structure of its markets. The main market structures are: 1. Monopoly 2. Oligopoly 3. Perfect Competition 4. Monopolistic Competition Each of these market structures have unique characteristics‚ and can be classified according to three factors. The degree of competition‚ the first factor‚ is important as it classifies markets into different market structures. It compares the relative sizes of firms‚ the amount of sellers (vendors)
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Why perfect competition?? Executive Summary This report provides information related to the four main market structures and why perfect competition is the most efficient. Features of four market structures and comparison of monopoly and perfect competition. Perfect completion is most efficient Subject matter Details Conclusions Introduction Market structure is best defined as the organizational and other characteristics of
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Assignment No. 3 (Fall 2007) Deadline Your assignment must be uploaded/submitted before or on November 17th‚ 2007. Uploading instructions Please view the assignment submission process document provided to you by the Virtual University to upload the assignment. Rules for Marking It should be clear that your assignment will not get any credit if: The assignment is submitted after due date; The submitted assignment does not compile or run; The assignment
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Can perfect competition achieved by Electronic Commerce? Introduction Information and knowledge have emerged as most important sources of wealth in the recent years (Kehal & Singh 2005‚ p.vii). There is a computer-based technology storm and it has impact and influence on the global market‚ education and government. More and more people are using the personal computers and Internet‚ and it has becoming as a fundamental tool to our daily lives. We all directly or indirectly involved in the variety
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