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By Market Force
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∙ 10y ago
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Can a perfectly competitive firm set a price for its products that is above marginal cost?
A perfectly competitive firm would set its prices at a perfectly competitive price.
What does a perfectly competitive market consist of?
It means that no enterprise (or economical agent) that participates in the market is able to have an effect, through their practices, in the final price of the products. The price is set by the market. That's because they don't hold a big enough percentage of the market. Thus a perfectly competitive market consists of a group of individuals and firms trading many goods and services
Why would a firm in a perfectly competitive market always choose to set its price equal to the current market price?
Because if it set its price higher than the current market price, it would not sell anything; and if it set its price lower than the current price, it would sell all of its product, but it would not make an economic profit. Understand, however, that this does not happen in real life, because in real life, there is no such thing as a perfectly competitive market.
Why is a Monopoly markets undesirable RELATIVE to perfect competitive market discuss?
In Monopoly, there is no market power as the monopoly firm is the only supplier and holds pricing power. However in a perfect competitive market, prices are set by interaction of supply and demand. This is why monopoly markets are undesirable relative to perfect competitive market.
Difference between perfect and imperfect markets?
Perfectly competitive markets are those where a "standardized" product (think corn or wheat) is exchanged. In such markets there are many, many sellers and buyers, so no single buyer or seller is able to have any effect on the market via their actions.
Can a perfectly competitive firm set a price for its products that is above marginal cost?
A perfectly competitive firm would set its prices at a perfectly competitive price.
what is the differences between Perfect Competition and Monopoly Market?
The difference between a monopoly market and a perfectly competitive market is that in a perfectly competitive market there are many sellers and buyers, the traded goods are homogeneous goods or the same goods and sellers are not free to set prices. whereas, a monopoly market is a market that has only one seller, so buyers have no other choice and sellers have a large influence on price changes.
What does a perfectly competitive market consist of?
It means that no enterprise (or economical agent) that participates in the market is able to have an effect, through their practices, in the final price of the products. The price is set by the market. That's because they don't hold a big enough percentage of the market. Thus a perfectly competitive market consists of a group of individuals and firms trading many goods and services
Why would a firm in a perfectly competitive market always choose to set its price equal to the current market price?
Because if it set its price higher than the current market price, it would not sell anything; and if it set its price lower than the current price, it would sell all of its product, but it would not make an economic profit. Understand, however, that this does not happen in real life, because in real life, there is no such thing as a perfectly competitive market.
Why is a Monopoly markets undesirable RELATIVE to perfect competitive market discuss?
In Monopoly, there is no market power as the monopoly firm is the only supplier and holds pricing power. However in a perfect competitive market, prices are set by interaction of supply and demand. This is why monopoly markets are undesirable relative to perfect competitive market.
In a perfectly competitive market while an industry is a price maker an individual firm is a price taker elaborate?
An industry is a price maker because many companies compete and the market dictates the price. Companies are price takers because they can't set the prices. Organizations have to focus on keeping cost low.
Difference between perfect and imperfect markets?
Perfectly competitive markets are those where a "standardized" product (think corn or wheat) is exchanged. In such markets there are many, many sellers and buyers, so no single buyer or seller is able to have any effect on the market via their actions.
How are electricity retailers in Singapore set their price?
Electricity retailers in Singapore are preparing a buffet of options for consumers and has their own competitive prices, but In Singapore, The EMA was also responsible for making the initial set of wholesale market rules.
What is the difference between administered prices and market prices?
administered price means price set by a body outside of the market..And market price is a price set up on basis of demand and supply.
What happens to prices set below market equilibrium?
There are a number of things that will happen to prices set below market equilibrium. They will cause a high demand and this will result in limited supply due to the low prices.
Explain why perfect competition may result in allocative efficiency?
Because in a perfectly competitive market, resources are used perfectly efficiently (excuse the grammar). A purely competitive market has very many peculiar features. One of them is that every firm is a price taker. This means they cannot set the price, so they must be as efficient as the most efficient competitor or they will be out-priced. This results in inefficient firms going out of business and only the most efficient staying alive.
Why is economic efficiency important to a free market economy?
Generally speaking, a company in a free market economy must set prices for its products that are "competitive" with other companies in the same line of business. If a company is inefficient in its operations, it won't be able to remain in the market of its competitors and may go bankrupt.
