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They are guaranteed a profit.
What else can I help you with?
A Is the market supply curve for a product more or less price elastic than the supply curve of one of the firms in the market Why?
The market supply curve of a product is more price elastic than the supply curve of one of the firms in the market. The reason is that for any given price change, the market quantity response reflects the change in output of all the firms in the market.
Why the firm supply curve is horizontal?
The firm supply curve is horizontal in a perfectly competitive market because individual firms are price takers; they sell their products at the market price set by overall supply and demand. At this price, firms can sell any quantity they choose without affecting the market price. Therefore, they will supply as much as they can produce at that price, leading to a horizontal supply curve. If the price falls below this level, firms would not cover their costs and would reduce output to zero.
What is the lowest point on a firms short run supply curve?
The minimum is price=average cost below this price supply=0
Going rate pricing?
All firms do have the power to fix a price ,but insteadof doing so,in a competitive market situation firms fix a price which is equal to the average price charged by all firms in an industry,ie,it collects all the prices firms with same product and compute the average.
What is the price of iron ore in china?
Posted pricing from the big three is $170 per ton. However, there are some supply contracts in place, some volumes discounts and inflated estimates. Assume $140-160
Commodity brokers use forward and futures contracts for what reasons?
The seasonal nature of many commodities would lead to wide variation in supply and price without these contracts.
What is price leader ship?
Price leadership is a pricing strategy where one leading firm in an industry sets the price for a product or service, and other firms follow suit to maintain market stability and competitiveness. This often occurs in oligopolistic markets where a few companies dominate, allowing the price leader to influence pricing without triggering price wars. The leader typically has significant market power or brand recognition, making its pricing decisions influential for competitors. As a result, price leadership helps reduce uncertainty in pricing among firms within the same market.
What factor affect price?
What factors usually affect pricing?
Is price in perfect competition is fixed?
In perfect competition, the price is considered fixed for individual firms because they are price takers, meaning they cannot influence the market price due to the presence of many competitors offering identical products. Firms must accept the market price determined by the overall supply and demand in the industry. While the market price can fluctuate based on changes in supply and demand, individual firms must sell at that prevailing price to remain competitive.
What is price leadership model of an oligopoly?
The price leadership model of an oligopoly occurs when one dominant firm sets the price for a product, and other firms in the industry follow suit, adjusting their prices accordingly. This leader typically has a significant market share and acts as a benchmark for pricing strategies. Price leadership can help maintain stability in the market by reducing price competition and enabling firms to achieve higher profits. It can manifest in different forms, such as dominant firm price leadership, where a single firm leads, or collusive price leadership, where firms coordinate their pricing strategies.
Why might the aggregate supply be inelastic?
Aggregate supply may be inelastic due to factors such as limited production capacity, fixed resources, and long-term contracts that restrict firms' ability to quickly adjust output in response to price changes. Additionally, when the economy is near full capacity, firms face challenges in scaling up production without incurring higher costs, leading to a steeper supply curve. This inelasticity can be more pronounced in the short run, where firms cannot easily change their labor or capital inputs.
According to aggregate supply curve what happens as the price level increases?
firms have more of an incentive to increase output
