Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Economics Denzel Presentation (Perfect Competition)

  • Login to see the comments

  • Be the first to like this

Economics Denzel Presentation (Perfect Competition)

  1. 1. Denzel Partnership Presents <ul><li>Sushi 360º </li></ul>
  2. 2. The Nature of Our Market <ul><li>Perfect competition </li></ul><ul><li>Our competition is fierce </li></ul><ul><li>Advertising is useless </li></ul><ul><li>All information is public </li></ul>
  3. 3. The Nature of Our Market <ul><li>Demand is extremely elastic </li></ul><ul><li>The large market reigns supreme over prices </li></ul><ul><li>Every product is substitutable with others in the market </li></ul><ul><li>Efficient </li></ul><ul><li>Easy entry and exit </li></ul>
  4. 4. Graphs <ul><li>Important points of perfect competition </li></ul>
  5. 5. Quantity Cost P = MR= AR= D Long run equilibrium in perfect competition MC AC Qe 0
  6. 6. Long-run equilibrium (industry) Price Quantity S D 0 P Q^ (industry)
  7. 7. Cost Quantity P = MR= AR= D MC AC Q1 C P1 Firm in perfect competition making supernormal profit 0
  8. 8. Price Quantity S1 D P1 Q1 S2 P2 Q2 0 Cost Quantity P1 MC AC Q1 C P1 P2 Q2 The impact on a market of supernormal profit 0
  9. 9. Short-run losses Cost Quantity C P Q Loss MC AC P=MR=AR=D
  10. 10. Break-even price Cost Quantity MC AC P=MR=AR=D
  11. 11. Shut down point Cost Output MC AC P=MR=AR=D AVC C E D B P A P1 Q 0 Loss
  12. 12. How We Determine Cost <ul><li>Price is completely determined by the market </li></ul><ul><li>Price takers not price makers </li></ul><ul><li>Costs must meet market price </li></ul><ul><li>Variable: wages, supplies </li></ul><ul><li>Fixed: rent </li></ul>
  13. 13. Advantages <ul><li>We can easily enter the market with little investment </li></ul><ul><li>Necessity for efficiency keeps us competitive </li></ul><ul><li>We have a huge market before us </li></ul><ul><li>Free information can keep us innovative </li></ul><ul><li>Safe and reliable investment </li></ul>
  14. 14. Disadvantages <ul><li>Stolen innovation </li></ul><ul><li>No control of the market </li></ul><ul><li>Only way to improve is cost reduction </li></ul><ul><li>Small </li></ul><ul><li>Returns not too impressive </li></ul>
  15. 15. Farewell <ul><li>Live long and prosper. </li></ul>

×