Discussion Competitive Markets This article in the Economist magazine (Links to
ID: 1155275 • Letter: D
Question
Discussion Competitive Markets
This article in the Economist magazine (Links to an external site.) suggests, based on significant evidence, that competition in American markets is not only constrained, but is becoming less so, as fewer companies dominate business.
In another article, published by the IMD World Competitiveness Center (Links to an external site.), the US is shown as being fourth in global economic competitiveness, after Hong Kong, Singapore and Switzerland.
These two publications are using the word "competition" in different ways -- please describe how it is being used in each case.
Our model of Supply & Demand is based on a model of perfectly competitive markets. If our markets are not competitive, how does that affect this model?
Submit your answer in the box. It should be a few paragraphs long and include a reference to evidence to back up what you are saying.
Economist - https://www.economist.com/briefing/2016/03/26/too-much-of-a-good-thing
IMD world competitivenss - https://www.imd.org/news/updates/new-competitive-global-elite-emerges-in-imd-business-schools-latest-world-competitiveness-ranking/
Explanation / Answer
Answer:
As we know that in the U.S economy is perfectly competitive. There are various features of the perfectly competitive as follows:
Be that as it may, this highlight does not hold great in light of the fact that in the U.S advertise there is no opposition. In perfect competition, there is zero economic profit but it does not hold good for the economic where it has monopolistic competition.
In monopolistic frame, beginning cost paid by the buyer is much high and businessperson gave separated item.
As in perfect competition the equiliburm is at point where MARKET DEMAND =MARKET PRICE. In short run equiliburm will be affected by the demand but in the long run, equiliburm where both demand and supply of a product is affected. In long run only normal profit earned. But in the America the plan is different such that they want to maximise their profit by different product. For increasing GDP and National income of the country normal profit does not contribute so the key of success of the U.S is the monopolistic market exist.
The firm want that in short run they also make profit for survival where MR=MC but in perfect market MR=P.
So the US economy has changed their strategies and methodology and enter different nations like hong-kong to contend in the market. But if the U.S economy has monopolistic than there are very few sellers and charge higher prices to book their profit.
It is obligation of the fed to watch the working of the huge businessperson and making monopolistic market in the US. The demand and Supply also affect the US monopolistic market. A monopolistic market is in equiliburm where the quantity sold and bought is such that it maximizes profit. Supply is constantly not as much as request.
Essence: from my perspective, sustained should check the working of enormous businessperson that they are making monopolistic market and change the model/working of interest and supply.