Market Structures and Maximizing Profits
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- Category: Politics: Economics
- Date Submitted: 07/03/2010 01:31 PM
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Market Structures and Maximizing Profits
The competitive market structure is characteristic of perfect competition. Competitors have no market power. Conditions for competitive markets are strict and there are few, still the concept is useful in real life markets. (Wikipedia, 2010).
The main characteristic of a competitive market is price taking; no single participant influences the price of selling or buying. Competitive markets have infinite buyers and sellers means that the products have unlimited buyers to buy at a certain price and unlimited sellers or suppliers to produce products for sell at a certain price. (Wikipedia, 2010).
Competitive markets have no barriers for entry or exit, it is easy to enter into the market and exit the market. Prices and quality of products are known by both consumers and manufactures of products being sold on the market, and there are no cost related to the exchange in the market. In a competitive market companies sell products in relation to marginal cost and marginal revenue to maximize profit. Products or services pricing vary little from suppliers. (Wikipedia, 2010).
The short-Term of competitive market are not efficient, output where marginal cost are concerned is equal to average cost, however output will occur where marginal cost is equal to marginal revenue, therefore marginal cost equals marginal revenue. In the long-term such markets are productively efficient. (Wikipedia, 2010).
Any profit-maximizing producer is faced with price equal to marginal cost, in turn factors of price equals factors in revenue. This allows derivation on supply and demand in the competitive market. (Wikipedia, 2010).
Price is determined in competitive markets are looked at in two ways; neo classical, and competition. One agent cannot affect prices the agent is either so small or their presence or absence leaves the equilibrium of the market unaffected and assumes a negligent impact by postulating a continuum of infinite agents....
The competitive market structure is characteristic of perfect competition. Competitors have no market power. Conditions for competitive markets are strict and there are few, still the concept is useful in real life markets. (Wikipedia, 2010).
The main characteristic of a competitive market is price taking; no single participant influences the price of selling or buying. Competitive markets have infinite buyers and sellers means that the products have unlimited buyers to buy at a certain price and unlimited sellers or suppliers to produce products for sell at a certain price. (Wikipedia, 2010).
Competitive markets have no barriers for entry or exit, it is easy to enter into the market and exit the market. Prices and quality of products are known by both consumers and manufactures of products being sold on the market, and there are no cost related to the exchange in the market. In a competitive market companies sell products in relation to marginal cost and marginal revenue to maximize profit. Products or services pricing vary little from suppliers. (Wikipedia, 2010).
The short-Term of competitive market are not efficient, output where marginal cost are concerned is equal to average cost, however output will occur where marginal cost is equal to marginal revenue, therefore marginal cost equals marginal revenue. In the long-term such markets are productively efficient. (Wikipedia, 2010).
Any profit-maximizing producer is faced with price equal to marginal cost, in turn factors of price equals factors in revenue. This allows derivation on supply and demand in the competitive market. (Wikipedia, 2010).
Price is determined in competitive markets are looked at in two ways; neo classical, and competition. One agent cannot affect prices the agent is either so small or their presence or absence leaves the equilibrium of the market unaffected and assumes a negligent impact by postulating a continuum of infinite agents....