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Step 1
Read the following scenario.
Imagine a market where there is perfect competition between two or more companies, such as a fish market where vendors offer the same products at the same price or online ticket auctions like StubHub. In this market there are four key elements to perfect competition:
- a large number of buyers and sellers
- no barriers to entry or exit
- perfect mobility for customers choosing products
- homogenous products
Step 2
Use the scenario to answer the following questions.
in Step 1:
- Explain how output, price, and profit are determined in your
perfectly competitive market in the long run. - How does that lead to efficiency?
- How could changes in technology affect the market?
- How could an increase in demand affect the market?
- What are the effects of new businesses entering the market?
- What are the effects of businesses leaving the market?
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- The following are excerpts from the article: Stirring the Pot . $80 Coffee Beans – Yikes! Bangor Times. May 22nd, 2016. “ The Third Wave in coffee refers to the growth of small, independent coffee roasters who developed as an alternative to Starbucks when that company grew and disaffected coffee drinkers looked for alternative sources for their caffeinated drinks." “..companies of this type provide a relatively small clientele with great tasting coffees and verified attributes in the sourcing of coffee beans- organic, shade-grown, bird friendly, direct trade (it's better than fair trade), single-farm sourced, etc". "For a Third Wave coffee company, the goal is to satisfy existing consumer interest or create new consumer interest in attributes that its customers believe only that company can offer." ...firms are always trying to create new and better differentiation to set themselves apart from those who have been successfully earning monopoly profits. This very phenomenon is seen as…The following are excerpts from the article: Stirring the Pot . $80 Coffee Beans – Yikes! Bangor Times. May 22nd, 2016. “ The Third Wave in coffee refers to the growth of small, independent coffee roasters who developed as an alternative to Starbucks when that company grew and disaffected coffee drinkers looked for alternative sources for their caffeinated drinks." "..companies of this type provide a relatively small clientele with great tasting coffees and verified attributes in the sourcing of coffee beans- organic, shade-grown, bird friendly, direct trade (it's better than fair trade), single-farm sourced, etc". "For a Third Wave coffee company, the goal is to satisfy existing consumer interest or create new consumer interest in attributes that its customers believe only that company can offer." ...firms are always trying to create new and better differentiation to set themselves apart from those who have been successfully earning monopoly profits. This very phenomenon is seen as…JYour business has the capacity to produce up to 5 units/week. The table & graph below show average cost (AC) for different weekly production levels. Your objective is to maximize profit each week. Average Cost 22 20 AC 18 1 20 14 2 15 12 3 12 10 1 2 4 4 13 Quantity 15 Your product sells in the market for $21/unit, and you can sell as many units at that price as you can bring to market. You know from your economics training that deciding how much to produce should rely on marginal concepts like marginal cost (MC). So, based on the AC table above, create a table that shows the MC of each unit. (Assume that there are no fixed costs, so total costs are zero if Q=0.) Based on MC for each unit, determine the profit-maximizing quantity to produce and sell. BRIEFLY explain your answer. (Your answer needs to be based on MC and being able to sell each unit for $21.) AC ($/unit)
- Question # 5 A) Suppose in a market of confectioneries, there are only four suppliers; Delizia, Sachas, La Farine and Pie in the Sky. Using the data in give Table and answer the following the questions using completely labeled graph for each part. Price Delizia Qs Sachas Qs La Farine Qs Pie in the Sky Qs 10 50 100 300 650 20 100 200 600 1,300 30 150 300 900 1,950 40 200 400 1,200 2,600 50 250 500 1,500 3,250 Derive the market supply at given price levels. Also, illustrate it graphically and label it. Suppose the technology improvement has increased the output in the confectionery market by 100 units by every firm at each price level. Identify the change in the supply and also, illustrate it graphically and label it. B) Given the following individual demand and supply schedules for pen and answer the following the questions using completely labeled graph for each part. Price Demand by Ali Demand by…The following are excerpts from the article: Stirring the Pot . $80 Coffee Beans – Yikes! Bangor Times. May 22nd, 2016. “ The Third Wave in coffee refers to the growth of small, independent coffee roasters who developed as an alternative to Starbucks when that company grew and disaffected coffee drinkers looked for alternative sources for their caffeinated drinks." "...companies of this type provide a relatively small clientele with great tasting coffees and verified attributes in the sourcing of coffee beans- organic, shade- grown, bird friendly, direct trade (it's better than fair trade), single-farm sourced, etc". "For a Third Wave coffee company, the goal is to satisfy existing consumer interest or create new consumer interest in attributes that its customers believe only that company can offer." "...firms are always trying to create new and better differentiation to set themselves apart from those who have been successfully earning monopoly profits. This very phenomenon is seen as…What is an example of another business that stays open even when it's slow, and its revenue does not seem like it could cover its costs? Use microeconomics terms to explain
- Suppose that the market for sports watches is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point. PRICE (Dollars per watch) 100 90 80 70 60 50 40 30 20 10 0 0 MC ATC AVC + + 10 20 30 40 50 60 70 80 QUANTITY (Thousands of watches per day) 90 100 Profit or Loss ?Food prices in sports stadiums are notoriously high because there is a limit on the numberof vendors that can operate in the stadium, which is a barrier to entry. In 2017, the AtlantaFalcons, an American football team, lowered the barriers to entry by allowing more foodvendors into their stadium. If the market for food in the stadium follows our perfect marketassumptions, what might you expect happened after this change? Do not worry about theunderlying facts of each statement, only whether it makes economic sense given our model.(Select one or more.)(a) The price of food in the stadium decreased because of an increase in supply.(b) The price of food in the stadium decreased because of an increase in demand.(c) The quantity of food sold decreased because of a movement of the supply curve.(d) The quantity of food sold increased because of a movement along the demand curve.(e) Profit per vendor decreased because of lower food prices.(f) Profit per vendor increased because of greater…Suppose in a market of confectioneries, there are only four suppliers; Delizia, Sachas, La Farine and Pie in the Sky. Using the data in give Table and answer the following the questions using completely labeled graph for each part. Price Delizia Qs Sachas Qs La Farine Qs Pie in the Sky Qs 10 50 100 300 650 20 100 200 600 1,300 30 150 300 900 1,950 40 200 400 1,200 2,600 50 250 500 1,500 3,250 a) Derive the market supply at given price levels. Also, illustrate it graphically and label it. b) Suppose the technology improvement has increased the output in the confectionery market by 100 units by every firm at each price level. Identify the change in the supply and also, illustrate it graphically and label it.
- Suppose in a market of confectioneries, there are only four suppliers; Delizia, Sachas, La Farine and Pie in the Sky. Using the data in give Table and answer the following the questions using completely labeled graph for each part. Price Delizia Qs Sachas Qs La Farine Qs Pie in the Sky Qs 10 50 100 300 650 20 100 200 600 1,300 30 150 300 900 1,950 40 200 400 1,200 2,600 50 250 500 1,500 3,250 Derive the market supply at given price levels. Also, illustrate it graphically and label it. Suppose the technology improvement has increased the output in the confectionery market by 100 units by every firm at each price level. Identify the change in the supply and also, illustrate it graphically and label it. Given the following individual demand and supply schedules for pen and answer the following the questions using completely labeled graph for each part. Price Demand by Ali Demand by Eman Supply…2. Kate decided to establish a small coffee company named Kapeko. However, Mary's Coffee shop has already dominated the market. Now, the profit of Mary's Coffee shop and Kapeko is dependent on the decision of Kate to enter the market and how Mary's Coffee shop will set the price for her coffee. Below is diagram describing their possible actions.Del's and Rodney's are two plumbing services in a gentrifying area of South East London. Within the area they service, the two firms operate as a duopoly and together serve one hundred percent of the available local market. One of their key lines of business is visiting customer's homes to install a new shower rail. A student project has been investigating the local plumbing business and has estimated the following information for Del's and Rodney's: Total demand for new shower rails per week is given by P = 200 - 4Q Where Q is total market demand and can be divided between Del's (qd) and Rodney's (qr) such that Q = qd + qr Assuming that the marginal cost of serving an extra customer is £40 for each, and that marginal revenue for Del is given by MRd 2008qd - 4qr And marginal revenue for Rodney is given by MRr Then 2008qr - 4qd 8 CONTINUED
