Provide an example and describe the economic concepts of perfect competition, imperfect markets and profits, consider the effects of the profit maximizing condition that businesses use to guide decision-making and included in your example.
|Market||Features||Example||Condition for profit maximization|
-Free entry and exit.
-Firms and consumers are price takers.
-No selling costs
-Huge number of buyers and sellers.
-zero economic profit
|Market for Vegetables||
-no close substitute of goods.
-restriction on entry.
-Firm is price maker
|Debeers||Marginal cost=Marginal revenue|
-huge selling costs
-Free entry and exit
-Some control over price
-Positive profits in the short run and normal profits in the long run
|-Firms in hair care industries like loréal.||MR=MC|
-Very few firms
-Market is controlled by the few firms
-restriction on entry
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