A. A purely competitive market exists when the number of
independently acting buyers and sellers is so large
that individual participants have no affect on market
price and quantity.
B. Products sold are virtually identical. Agricultural products
such as potatoes and wheat are examples of
competitively sold products.
C. Pure competition industries as defined is difficult to find
because some monopoly power usually exists.
D. Price is determined by intersection of industry supply
E. Individual firms are Price Takers as they inherit
a horizontal demand-marginal revenue curve from
1. A firm can not sell above market as products are
identical and no one will buy higher than market.
2. There is no reason to sell below market as it would
mean less revenue and less profit.
Why "We're Different"
Adjacent advertisements in an 1885 newspaper for the makers of two competing ore concentrators (machines that separate out valuable ores from undesired minerals). The lower ad touts that their price is lower, and that their machine's quality and efficiency was demonstrated to be higher, both of which are general means of economic competition.
From chapter 22 on Understanding Profit
A. Price is higher than average total cost so total
is greater than total
B. Cost includes a reasonable return on investment called "normal profit"
so under this definition of cost, any profit is an excess.
1.Profit Maximization for a Competitive Firm from Dennis Kaufman Wisconsin-Parkside.
2. Profit Maximization in Perfect Competition by Fiona Maclachlan
3. Perfect Competition Graphing Practice from Econ in 60 seconds
|III. Purely Competitive Adjustment|
B. Perfect Competition in the Long Run from Econ in 60
Growing Nation shows
production costs change over
explored in explored in chapter 21 affects this analysis.
Is Purely Competitive Adjustment Causing a New Normal Or Is
The New Normal Not New Because the Old Normal Was Not
Beginning with economic expansion caused by WWII, demand for U.S. manufactured goods increased dramatically. As a result, demand increase from D to D.' Profits maximization resulted. Thanks in part to Unions, these manufactures shared their excess profits with unionized workers and wages increases spilled over to many nonunion workers. It took Germany, England and Japan many years to repair war damaged manufacturers and bring an end to U.S. manufacturer's monopoly power.
Serious competition from foreign manufacturers beginning with automobiles and steel increased supply causing Rust Belt Industries to lose their pricing power. This eliminated excess profits. Some industries incurred a loss as supply increased too much. Wage give backs began and many workers found themselves with stagnating wages. Companies used technology and outsourcing to be more competitive and maintain profit but this put pressure on wages.
This also happened in the finance industry with competition coming from foreign banking and cheap Internet trading. Their attempt to increase D for their services with exotic products like derivatives has not worked out well as of 07/01/10.
The bottom line is the standard of living enjoyed by U.S. citizens, their micro-lives, will grow more slowly as it is forced to share the wealth with people from around the world. We may even have to give some back because of our energy dependence and recent decadence though increased production of energy with shale has lessened lessen this dependency. But we will still enjoy the highest industrialized world standard of living in the.
Technology will continue to make our macro-lives .
from economist.com 01/12/13
better, especially now that the Asians are contributing with their R&D
investments and collaborative competition in science helped by the Internet has
accelerate scientific advancement. Plus gains from science are often cumulative and while not
a straight line upward they eventually make our macro lives better. Think
childhood diseases being cured and smart phones. Plus its always good remember the best things in life will continue to be free and having enough
money is a function of demand, not supply. 08/12/11 updated 8/24/15
Citizen Well-Being is More Important and should grow more rapidly.
1) Our society's stability has consistently increased US productivity which is
IV. Economic Analysis of
Econintersect: The U.S. slipped to seventh place in the ranking of economic competitiveness in the 2012. source the WEF (World Economic Forum). Last year the U.S. ranked fifth. The current result marked the fourth year of decline for the country that used to rule the competitiveness roost.
More from econintersect.com.
on free trade
|D. SWITZERLAND tops the latest competitiveness ranking from the World Economic Forum|
Best known for its annual shindig in Davos (a Swiss ski resort). It is closely followed by Singapore. Finland has topped Sweden to third place. Of the big emerging economies, China remains on top, with Brazil moving up.
The most striking fall is the United States, which has dropped in the rankings for four years in a row. It is now seventh. The rankings are based on criteria such as institutions, infrastructure, financial systems, flexible labor markets, economic stability, innovations and public services. Plotting the scores against GDP per person reveals an unsurprising correlation: competitiveness brings wealth, but rich countries can most easily afford to provide the conditions for it. They can squander competitiveness too.
|Editors Note: Comparing the U.S. to anyone other than Germany and Japan is difficult as others are either small or developing. Plus we get a benefit from our being the world's currency which accrues from our being easily the world's strongest military and industrial nation. China assembles parts from all over Asia and has a way to go to be considered in this group.||
from Turning Point in American History
S and P
volatility depicts the problem of growth volatility systemic
to capitalism makes puts pressure on monetary and fiscal policy
|Chapter 23 Class Discussion Questions|
|Chapter 23 Homework Questions|
|Table of Contents|
|Economics Internet Library|