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Perfectively Competitive Market

Free Essay Sample «Perfectively Competitive Market»

Management entails on the control and supervision of business according to the stipulate business ethics and professionalism. A market with the occurrence of exchanges between the buyer and seller constitutes of dynamic market structures and model that keep on changing. Challenges in market are more accustomed to nature of business growth and structure type, a market can change from a monopolist to a oligopolist market due to the underlying market dynamics thus it is essential to understand and manage business to ensure stability due to competition (Heslop, M. (2000).

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A perfectly competitive market is the most crucial and difficult market that managers partake. It comprises of forces of demand and supply in the market influencing the pricing strategy in the market. These markets are intense and seller and buyers have no power to determine levels of output or prices and they flow with what is available. Competition aspect of this market entails on free entry and exit to and from the market by both buyers and sellers. Perfectly competitive markets have a demand curve that is horizontally sloped (Heslop, M. (2000). Profits are only maximized when Price = marginal cost which challenges the success ability of the firms. Marginal cost varies in this competitive firm according to the quantity produced. In these situations, perfectly competitive market consists of ‘price takers’ initiatives due to homogeneity of products (perfect substitutes). The competition between perfect substitutes slow down the process of price changes and influences more on the customer choice of purchase. Perfect knowledge on the products cost, quality and price that exist in the market.

In conclusion, the prevailing homogeneity of products in perfectly competitive markets challenges the success of this market. It is challenging to influence the competitive market.

Free Essay Sample «Perfectively Competitive Market»

 

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