Consider a perfectly competitive market in long-run equilibrium where Essay

Consider a unadulteratedly competitive securities industry in long haul equilibrium where all sign of the zodiacs operate under the same cost conditions. Suppose - Essay Example(70 marks) Market is a place where buyers and vendors meet each other for fulfilling needs and generating profits. The form of commercialize is of great importance in business and economics as it is responsible for defining its overall characteristics including the numbers and categories of suppliers, the variable or identical nature of the products offered by different firms operating in the same or different industries, is the market exhaustive enough or it allows the entry of nearly new competitor and most importantly the nature of the competition is it a perfect competition or not? The major decisions of different firms revolve rough these basic features which lead to the analysis of offering set and the number of inventory to be produced (McEachern, 2011). As far as perfectly competitive market i s pertain then it has the following features There is relatively quite a small number of sellers and buyers as compared to the needs of the customers and the overall market size. In this situation whiz firm has a very low effect over the market price and trends. As a result not a single firm can practice complete control over the cost and price ratios. The perfectly competitive market deals in identical products i.e. all the firms in the market sale the same product with minor or negligible variations. The customer choices are therefore independent of the quality of the product and other characteristics of the products excluding the price factor. The market forces such as demand and supply work freely to decide the equilibrium price and equilibrium quantity, in addition to this the government policies affect the price and quantity ratios through taxes and subsidiaries. There is a free entry for all the firms in the market. They can leave or enter the market in some(prenominal) ge ographical location without facing any obstacles in their way. They can also apply whatever factors of production they want to with whatever variations and manipulations. The market offers complete and fathomable information about the products and services. Therefore the firms are aware of the quality and characteristics of their products which leads them towards better performance. It is an ideal market to work in as it ensures the profits and flexibility of operations. In addition to free will related to entrance and exit hence giving numerous advantages to the consumers and sellers both (Dodd & Hasek, 1952). Now lets consider the representative of Rice market where the competition is perfect in nature. All the firms operating in this particular market are having the same costing conditions which are pass judgment to remain at the equilibrium stage in the long guide as well. The Automation Technology has become available to few of the firms in the market. This applied science is pretty much useful for the production and packaging purposes as it lowers the marginal cost per unit and therefore contributes in increasing the profit margin of the seller without the need of increasing the price of the commodity rather decreasing the cost of the product. The usage of the Automation Technology will have some short run and long run effects over the rice market whereas the factor prices and the demand of the product remain same. This will disturb the equilibrium state of the perfect competition. Application of some new technology is always beneficial for both the industry and the individual firms operating in the market as it is more strong and efficient than the previous