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write a response to this Perfect Competition/Competitive Markets
1.
I don’t believe there is such a thing as a perfectly competitive market. Even taking the text’s example of agriculture, I don’t think this is a great example, at least not anymore. Land appreciation has provided a huge barrier to entry as one source stated it takes at least 500 acres owned and 1,000 acres leased to make a living. The equipment involved in producing mass amounts of agricultural goods, whether that be plant or animal, are also incredibly expensive and the equipment is needed to produce enough goods to be viable in the agricultural industry.
Another characteristic of a perfectly competitive market is homogenous products. Niche markets within agriculture are driving advances in biotechnology that can control product attributes and create differentiation in everyday products. Take, for instance, tomatoes. There are now genetically modified cherry tomatoes that have been developed to grow in tighter bunches that take up less space, have a concentrated taste, and grow faster (around 40 days to maturity). This advancement in technology has cut production costs, which could affect selling price dramatically, and have created a different barrier to entry.
There are many reasons why I believe that it is difficult, if not impossible, to find a perfectly competitive market, and one of the biggest reasons is human’s everlasting drive for advancing technology. There will always be a desire to take an everyday object and create something better, faster, cheaper.
2.
This is a little out there so bear with me, but, I believe that as access to the internet is becoming more of a necessity and less of a luxury, a lot of online content will soon become more competitive, if not close to perfect competition. Take for instance, video streaming services. There is still a lot of differentiation between the services offered, you can’t stream Netflix originals on Hulu and vice versa. However, as more and more content is produced, the more homogenous the offerings will be. The price of Netflix and Hulu are within a few dollars monthly and have a pretty large portion of the market. As more players enter the market, such as YouTube TV, Disney +, Amazon Prime, etc. the closer those subscription fees are going to get as it won’t be worth it to pay more than the other for similar streaming experiences.
3.
Competitive firms can typically ONLY make money in the short run. They make money by entering early and capturing a portion of the market before an influx of other competitors. Another way to increase profit in the short term would be to figure out a way to reduce the cost of production, increasing your profit margin.
The odds of staying profitable in the long run are not great. In order for that to happen, a firm either needs to dominate the market early and create a monopoly (which even then, they would need to lower prices dramatically to keep the competition at bay), or they would need to differentiate themselves from the competition.
Williamson, S. (2017, June 27). How Much Money Does It Take To Become A Farmer. Retrieved from Successful Farming: https://www.agriculture.com/farm-management/business-planning/
The post was in reference to these questions.
1. Give an example of a perfectly competitive market (or one that closely approximates one) except those given in chapter 5. Explain why you believe this market is competitive. If you can’t think of such a market, explain why it is difficult to find a perfectly competitive market. Be specific.
2. Give an example of a market that is not currently perfectly competitive but could become one, or at least more competitive, under certain possible circumstances. What are those circumstances and how will they make a market (more) competitive?
3. If (perfectly) competitive firms are price takers, how can such a firm make any economic profit in the short run? Can such a firm continue to make economic profit in the long run/ Why/how/why not? Explain.

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