1. Characteristics of competitive marketsThe competitive market model depends on the following three core assumptions:1. There must be many buyers and sellers-a few players can't dominate the market.2. Firms must produce an identical product-buyers must regard all sellers' products as equivalent.3. Firms and resources must be fully mobile, allowing free entry into and exit from the industry.The first two conditions imply that all consumers and firms are price takers. While the third is not necessary for price-taking behavior, assume for thisproblem that a market cannot maintain competition in the long run without free entry.Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not.Is the market competitive?ScenarioIn a college town, students choose between two providers of wireless internet access. Allstudent housing is wired for both companies, and the internet service offered by bothproviders is equally fast and reliable.Gentoo Inc. controls the copyright to a popular series of mystery novels. It is the onlycompany with the right to legally publish books in the series in the United States.In a large city, one chain of coffee shops controls a large market share because localsbelieve its coffee tastes better than that of its competitors.Dozens of clothing manufacturers produce plain black undershirts. Consumers view plainblack undershirts as identical and have no preference which company makes theirundershirts.

Under a perfectly competitive market: A large number of buyers and sellers operate. All firms…

In a college town, students choose between two providers of wireless internet access. All student housing is wired for both companies, and the internet service offered by both providers is equally fast and reliable. Gentoo Inc. controls the copyright to a popular series of mystery novels. It is the only company with the right to legally publish books in the series in the United States. In a large city, one chain of coffee shops controls a large market share because locals believe its coffee tastes better than that of its competitors. Dozens of clothing manufacturers produce plain black undershirts. Consumers view plain

In a college town, students choose between two providers of wireless internet access. All student housing is wired for both companies, and the internet service offered by both providers is equally fast and reliable. Gentoo Inc. controls the copyright to a popular series of mystery novels. It is the only company with the right to legally publish books in the series in the United States. In a large city, one chain of coffee shops controls a large market share because locals believe its coffee tastes better than that of its competitors. Dozens of clothing manufacturers produce plain black undershirts. Consumers view plain

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 1.1P

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2. List the features that characterize a perfect competitive market. 3. What is a perfectly competitive market? Perfectly competitive markets establish capitalist justice and maximize utility in a way that respects buyers’ and sellers’ negative rights? Explain how and what types of negative rights are respected.
8. “Creative destruction” is the process by which:a. Old buildings are demolished and new ones are build in their place.b. Old sources of competitive advantage are displaced by new ones.c. Old skills become obsolete and new ones develop in their place.d. Old technologies are replaced by new ones.
QUESTIONS are based on Carl's Jr case study article 1. Discuss what are potential sources of competitive advantage for a company? Give examples 2. Argue is a competitive advantage sustainable? Give examples 3. Conduct an analysis of the strengths, weaknesses, opportunities, and threats (a SWOT analysis) of Carl’s Jr. 4. What changes should Carl’s Jr. make in order to develop a sustainable competitive advantage? (Hint: to help answer this question, think of how you might further segment the YHG group that Carl’s Jr. is trying to sell to, and develop a strategy around these subgroups.)
6. Which competitive force has Naomi capitalized on to benefit her company's manufacturing processes? a. Buyer power b. Threat of substitute products or services c Threat of new entrants d. Supplier power
In economics, the operation of the competitive market model (Perfect Competition) produces efficient uses of resources and meets people’s needs and wants; in other situations, markets fail to satisfactorily use resources efficiently and meet the needs and wants of people. Discuss, demonstrating your understanding of how, why and when markets work well or fail and what can governments do when markets fail. Use diagrams to help your explanation and argument.
12. How are money cost and opportunity cost related to each other? a. Opportunity cost must always exceed money cost. b. They are always identical in any economic system. c. If markets function well, they are closely related. d. In a market economy, they must be equal to each other. e. Money cost is greater than or equal to opportunity cost.
4. Examine the behavior of perfect competitive markets. How are prices determined in competitive markets? How does competition affect the profits of a firm or industry? What does society gain from market competition?
1.What is the primary mechanism that allows perfectly competitive markets to reach long-run equilibrium? Changes in the price of substitutes and complements Firms freely enter or exit the market when it is in their interest to do so Changes in consumer tastes Changes in production technology 2. Which of the following is true? Marginal cost curves are always downward sloping. A monopolist can set their price as high as they want without decreasing their sales. Firms have no fixed costs in the long run. A monopoly is a market in which many competitors sell identical goods. 3. Firms in monopolistic competition can increase demand for their product through effective advertising. Why might these firms choose not to invest in additional advertising? Advertising is almost never effective for firms in monopolistic competition. They don’t feel like it. Advertisements increase firm costs, and the increase in demand may not justify these costs. Advertising…
1.A perfectly competitive market is one in which many firms produce many different varieties of the same product. Group of answer choices : True False 2.Which of the following is one of the necessary conditions for the perfect competition model to exist? Group of answer choices : O. Total diminishing utility. O. Differentiated products. O. Large number of firms. O. Upward sloping average fixed cost. 3.The existence of positive economic profits induces firms to: Group of answer choices : O. enter an industry, which shifts the market supply curve to the left and decreases market price. O. enter an industry, which shifts the market supply curve to the right and increases market price. O. exit an industry, which shifts the market supply curve to the right and decreases market price. O. enter an industry, which shifts the market supply curve to the right and decreases market price 4.If a firm in a perfectly competitive market model experiences a technological breakthrough:…
1.) Which one of the following sets of circumstances could the existence of economies of scale cause in a market? a.) More firms looking to move overseas. b.) Firms merging with and buying out other firms in their markets, thus leading to an increase in market competition c.) More american overseas firms will decide to come home. d.) None of the three other possible answers listed here are correct.
1. Critically analyse Danone Corporation’s entry mode of 2 markets ( for example, UK, Nigeria, etc.) from 2 different continents ( excluding India) as it is a multinational corporation with references of the informations. Consider the following points during writing the answer : a. Reason behind choosing this particular market and when did they enter the market and with what product?b. Entry mode and was it a good or regrettable choice - critically analyse;c. Was the business a success or failure in the new market? Why.
3 a) Start with a model of the situation before the crisis in Ukraine. Draw a model of a representative individual firm in the market for wheat, i.e. an Australian wheat farmer who is a price-taker in the global market for wheat, in long-run equilibrium. Comment on the assumed market structure. Show and explain the amount of wheat the farmer will produce to the market, and explain revenue, costs and profits.