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Santa Ana College Competitive Market and Minimal Competition Analysis Paper

Santa Ana College Competitive Market and Minimal Competition Analysis Paper

Question Description

I’m working on a micro economics discussion question and need guidance to help me learn.

please respond to each discussion below in 50 words each 100 words total no citations please thank you!

1.Although a perfectly competitive market is said to have the most efficiency in the matter of production and allocation of goods, one of the main principles of a perfectly competitive market states that the number of buyers and sellers in this type of market is fairly large. And because a perfectly competitive market also trades identical products, it would be hard to conclude that there are no competitions between firms.

Personally, I do not entirely agree with the claim that there is no competition between firms in a perfectly competitive market. While theory insists that all firms would have to follow the given price market, it would be hard for firms to stick to this ideal plan because each firm carries different costs, and the given market price may not give them enough profits to cover all their expenses. For example, let’s take two firms in two different areas that produce and sell one identical good. As taxation from places to places may vary from the other, a firm’s average cost of production would be higher than the other seller’s average cost of production. And when the given market price and quantity cannot provide a seller enough profits, that firm would have to disregard the production and allocation efficiency. Hence, the perfectly competitive market is indeed only a model benchmark for other different market structures in the real world to compare. With numerous competitions from regulations (such as taxation or direct limitation on production) to social problems (such as limited resources or environmental obstacles), it is no doubt for real-life markets to allocate their own beneficial methods and modify the ideals of perfect competition.

2.I believe that there is minimal competition in a perfectly competitive market because a perfect competitive market is a theoretical model. All real markets do not correlate within the perfectly competitive market. However, in theory i do believe in the possibility of minimal competition due to the fact that a perfectly competitive market consists of many buyers and sellers, undifferentiated products, no transaction costs, no barriers to entry and exit, and perfect information about the price of a good. With this being stated people. would still have their own opinions about certain firms even if they are almost an identical product. So i disagree with the claim that there is no competition between firms in a perfectly competitive market.

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