British Car Market Essay Example | Topics and Well Written Essays - 1250 words

British Car Market - Essay ExampleThe sodding(a) opposition is mere terminology that is used to describe a situation which can be easily comprehended by new learners in Economics. In the documentary world there is no merchandise that can be sort as being a stainless market. The main idea behind the perfect market is the term perfect competition. Perfect competition refers to the lawsuit where every aspect of competition is known thus giving all entropy to the market. In a perfect competition, an individual firm is called a price-taker this is because the market forces decide upon the equilibrium price and quantity. The point that everything is known means that regardless of how a good deal a firm produces it will get the resembling price throughout its schedule as demand is constant and no one can machinate the price or even miserableer it as the elasticity is ZERO in this case and the addition of each unit in the output brings bout the equivalent change as the previous one. This could be well reflected by the understanding of the Marginal Revenue principle. In the perfect market, demand tends to stay at the same level throughout the schedule so any increment to the cost will only add up to the loss. The main tendency of a perfect market is to produce at the lowest cost possible because price is the only factor which is considered important.In a perfect market, there be a commodious number of acquireers and sellers. This means that the market concentration ratio is very low for each firm which adds to the fact that there would be no burden upon the market if a firm collapses or enters into competition. The addition would only add to the overall output and nothing else and the addition would be of quite a low grain. Product Homogeneity Homogeneity of production is another factor that hinders the classification of the car market as being perfect. In a perfect competition, the products are homogenous that is they have the same attributes as of th eir substitutes or competitor products. This means that it will not make a difference that which item you buy and from where you buy as long as it matches your description. Since the products are homogenous in the market than quality issues can be raised whereas in a car market one is paying a worthy amount so it is important to have a distinction on what he buys. Cars are also classified as Status Symbols, keeping this in mind we come to the point that distinction is necessary and thus homogeneity in this market is not acceptable. submission and ExitMoving ahead we have the case for entry and exit. In a perfect market, every one is free to enter and exit at will. This means that costs are not an issue in this type of problem as free entry and exit means that the costs are low for firms and they can easily switch production among commodities. Further a perfect competition is dominated by small firms this is why the HHI (Herfindahl index) is low for these firms. bet that a car produ cer can switch production easily. SILLY isnt it Yes it is. The machinery required to manufacture a car is very different from that which makes Balloons. In this case if the demand for cars falls so can the producer shift to the Balloon industry in a momentary run Never, it is difficult to shutdown large