Answered: How does competition affect prices in a…

How does competition affect prices in a market system? How does it affect supply(what producers provide) and demand (what consumers want)?

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter3: Demand, Supply, And The Market Process

Section: Chapter Questions

Problem 16CQ

See similar textbooks

Related questions

Q: How does a lack of competition affect prices and output?

A: Competition in the market among the firms, producer or sellers is the comparison between the price…

Q: Which market offers higher consumer surplus and why? The perfectly competitive firm or the monopoly…

A: In perfect competition, there are large number of buyers and sellers and each firm sells identical…

Q: which market has free entry

A: Perfect competition is defined as the market structure in which there are large number of sellers in…

Q: Competition determines market price because the more that toy is in demand (which is the competition…

A: When demand increases,supply remaining same. Equilibrium price increases.

Q: In the year 2000, the town of Cuenca in Batangas did not have mountain resorts. Because of the…

A: The market structure can be divided into four based on the degree of competition and the type of…

Q: To what degree does the American economic system allow the restaurant industry to provide what we…

A: The American economic system favor's and supports the restaurant industry. The Nation can't…

Q: Is there perfect competition in the food delivery market? Why and How?

A: Monopoly, Oligopoly, Monopolistic Competitive forces, and Perfect Competition are the four market…

Q: What does competition do to the price of goods and services?

A: The number of firms within the market shows the competition level in the market. If there are many…

Q: Looking at the market for Sacramento Kings Coffee Mugs: Draw supply and demand curves that follow…

A: Since you have asked multiple questions, we will solve first question for you. If you want any…

Q: Assume firms decide to enter the market, how will this affect market price and quantity in the long…

A: In a market with perfect competition, every manufacturer offers the same products or services. There…

Q: What is the relationship between economies of scale and the level of market competition?

A: Economies of scale help more than just the company that produces the goods. Consumers will benefit…

Q: How is non-price competition different from price competition?

A: There are two ways producers can compete (with their aim being profit maximization). They are: Price…

Q: Find supporting evidence that competition makes markets more efficient in this case.

A: Competition arises when the number of sellers in the market increase, as more firms join an industry…

Q: What evidence of economic competition do you see in your everyday life? what evidence do you see on…

A: Economic competition refers to the situation where the firms in the economy compete with each other…

Q: Discuss how the presence of middlemen affects the operation of competitive markets.

A: In a competitive market, neither a single customer nor a single manufacturer can have a significant…

Q: Who said “The customer experience is the next competitive battleground” ?

A: Customer experience refers to the perception of a business by the customers. It is formed when a…

Q: Which of the following is NOT one of the five forces that determine the structure of competition in…

A: The market structure depends on what kind of good is produced, number of firms and buyers and entry…

Q: A. Discuss the advantage and disadvantage of seeking competitive advantage through price.

A: Comparative advantage happens when a country is able to produce a specific good or service at a…

Q: Many obstacles can lead to market failure such as price and quantity regulations and taxes explain…

A: Market Failure is defined as an inefficient distribution of good an services in a market economy. It…

Q: How does Nederlander’s Audience Rewards program result in a competitive advantage?

A: The factors that enable a company to produce goods or services better or cheaper than its…

Q: Free exchange occurs under perfect competition and mutually benefits both consumers and producers.…

A: Free trade basically refers to that countries can import and export goods without having to deal…

Q: How do firms in a competitive market work?

A: Perfect competition is a market where there are lage number of seller and buyers of identical and…

Q: If Wikipedia were provided in a competitive market, and the contributors of Wikipedia were only in…

A: Competition is the battle between producers to increase profits, increase sales, and so on. To look…

Q: View the video at the link below and share your thoughts on the economic concepts that you believe…

A: Yes it is TRUE that in order to raise prices a firm has to possess market power as the market forces…

Q: What is brand equity? List the components of brand equity, and describe how they provide value to…

A: The premium value helps the company in generating a value of its own when it is compared to the…

Q: Does a market equilibrium exist in an oglipolistic market? If so, how is it determined?

A: Equilibrium exists in all the markets. Therefore it would exist in oligopolistic market.

Q: Imagine a scenario in which the fashion industry is suffering from monopolistic price gouging and a…

A: Market failure refers to a situation in which market fails to perform its basic functions and fails…

Q: Do you think firms really try to maximize profits? Do firms (especially small ones) know what prices…

A: Economist generally assume that firms act as profit maximisers. Economists don’t think there’s…

Q: Describe in your own words the concept of market power

A: Market power refers to the ability of a firm (or group of firms) to raise and maintain price above…

Q: a-When the two firms act like one and charge the same price? b- What will be the market price? c-…

A: A ‘Cartel’ is a collection of private businesses or organizations that meet to manipulate the price…

Q: Which is most likely the result of healthy competition in the market?

A: Healthy market competition promotes good customer service, high-quality goods, and competitive…

Q: Why is competition an important factor that has to be studied before putting up a business?

A: Competitions refer to a situation when rivalry firms try to maximize profit by gaining market share…

Q: When the typical seller in a market has economic profits, then:

A: Profits are the excess of revenue receipts over the costs incurred by a firm in the production of…

Q: What is Market competition?

A: The market is a place where the buyers and the sellers interact with each other and the exchange of…

Q: Question 6 Discuss TWO major virtues of a market system.

A: A market system is any systematic process that allows many market participants to offer and demand:…

Q: Describe several strategies that companies can use to remain competitive in the globa economy

A: There are several strategies that a company can use to stay competitive in the global economy. 1.…

Q: Florida orange growers” advertise as a group, but individual orange growers do not. What does this…

A: There are large number of buyers and sellers in a perfect competitive market selling homogenous…

Q: Did Netflix create Blue Ocean space?Did it make the competition “irrelevant”? Why?

A: Blue Ocean Strategy:- The term "blue ocean strategy" refers to a market for a particular in which…

Q: he following is a quote from a New York Times article: “If a company makes product donations to the…

A: Total revenue is the product of price and quantity. Total cost includes all the fixed and variable…

Concept explainers

Imperfect Competition

Imperfect competition is relatively easier to understand once people have the knowledge of perfect competition. When the five conditions of perfect competition are not made, that market structure is said to be imperfect competition.

Question

How does competition affect prices in a market system? How does it affect supply(what producers provide) and demand (what consumers want)?

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

What are these mismatched trends telling us about how demand and supply work in the market?
Everyone shops for things they need for themselves and for gifts for others. Imagine you are taking an online class and you are looking to buy a new computer because your old one died. Class starts in two days. The market for computers is very competitive. There are several brands that have similar characteristics such as storage capacity, processor speed, number of USB ports, etc. but you have owned one that you liked and you want to buy that same brand, the X-Mark. You have a budget of $1,000. One popular store has the brand you like on sale for $850 because other stores are selling them for that price. You have a friend at that store who tells you that the store paid $700 for that computer. Please evaluate and explain the willingness to pay, consumer surplus, demand, producer surplus, cost and willingness to sell of this transaction. Define these terms in your explanation, not as separate definitions. Incorporate the meaning into your narrative so that you write a convincing…
What price does a firm charge for the good it produces?
why is competition good for the consumer from an economics perspective
What could be possible problems of consumer behavior in a competitive market.
Everyone shops for things they need for themselves and for gifts for others. Imagine you are taking an online class, and you are looking to buy a new computer because your old one died. The class starts in two days. The market for computers is very competitive. There are several brands that have similar characteristics, such as storage capacity, processor speed, number of USB ports, etc., but you have owned one that you liked, and you want to buy that same brand, the X-Mark. You have a budget of $1,750. One popular store has the brand you like on sale for $999.99 because other stores sell them for that price. You have a friend at that store who tells you that the store paid $925 for that computer. Please evaluate and explain the willingness to pay, consumer surplus (calculate), demand, producer surplus (calculate), cost, and willingness to sell this transaction. Define these terms in your explanation, not as separate definitions. Incorporate the meaning into your narrative so that…
You're shopping online, and you place an item in your virtual cart. Two days later, you return to the virtual cart to check out and find that the item is now more expensive. Assuming that the market is competitive, what could explain the price increase?
Explain different types of competition and also state why is competition good for the consumer from an economics perspective
Do business firms operating in competitive markets have a strong incentive to serve the interest of consumers? Are they motivated by a strong desire to help consumers?
What does the rise of alternative products like Puff Bar tell you about the overall role of market forces?
What is the goal of a firm in a market economy?
Answer the following questions. 1. In the year 2000, the town of Cuenca in Batangas did not have mountain resorts. Because of the influx of mountaineers to Mount Maculot during weekends, there are now five resorts operating in the said town and more than 10 resorts in nearby towns. All these resorts offer the same amenities-swimming pools and affordable lodgings. What feature of competitive markets does this demonstrate? Explain your answer.