Find out what’s in store for you in the competitive market!
How is your market structured? Is there only one firm or many firms in your market? This week, have a clear understanding of your market structure so that you can make the correct decisions regarding price and production.
Congratulations powerful Pisces! You are the exception to the rule that all firms within a market have zero market power & must accept the determined market price. Your firm managed to influence the market price of your goods giving you the success of ‘market power’! This week, continue to control your supply and demand of your goods to maintain your market power!
Feeling competitive? Many firms are producing more or less the same product as you and as a result, your competitive streak has been released! Your strong connection with your customers has certainly increased the level of competition in your market. Keep up your charm of sharing customer service and after sales service to increase the competition even more!
Warning Warning! Watch out for evil substitutes heading your way this week Taurus! Be wary of those substitutes who will try to increase the competition. The more of them you encounter, the more competition you will face!
Being in a competitive market has forced you to become a price taker. Unless you can achieve market power, I’m sorry to say that you have no other choice here. You simply must accept the price that your market determines.
How’s life in the perfectly competitive market Cancer? Realise that it is normal for firms to come and go into the market in a perfectly competitive market. The amount of firms entering and exiting the market means that buyers and sellers will have a great deal of information!
Your goal this week Leo is to maximise your profit! Remember that you are a rational person capable of thinking outside the margin so make the decision that will give you as large as possible profit. This week keep an eye on your marginal costs and marginal revenue. You will succeed in maximising your profit this week if your Marginal Revenue=Marginal Cost!
Two words concerning your revenue have been confusing you this past week: Average and Marginal. Take the time this week to distinguish between the two of them. Average Revenue is the amount of revenue your firm will get for every unit it sells. Marginal Revenue is the extra revenue your firm gets as a result of one additional unit of your good or service being sold. Since you’re in a competitive market, your MR=price of your good. Don’t let average and marginal confuse you this week!
This has been a tough week for you Libra. You are in a dilemma whether to temporarily shut down your firm. If you know the market conditions are tough, why not hold off from producing anything for now? That is easier said than done as you will have to still pay your fixed costs as well as saying goodbye to all the revenue you gained from selling your good. The stars say you should shut down if the price of the goods is less than the average variable cost. It’s your decision.
Another week of decision making for Leo. There’s one word you can’t stop thinking of…EXIT! Should you permanently exit your firm from the market now? Your gut instinct knows that you’ll benefit if you exit now as you’ll save the variable and fixed costs but your heart can picture all that revenue from the goods you’ve sold slip away. Check if your revenue is less than your total costs and if so, EXIT!
It’s time to stop moaning Capricorn and realise that there is nothing you can do about that sunk cost. Just face it, the sunk cost was an opportunity cost that you will never get back! The money has been spent, there’s no turning back. Whatever you decide to do this week, just ignore the sunk cost. The sunk cost will not interfere in your future so therefore simply ignore it.
You’re ready to set-up & get going with your firm but hold your breath Sagittarius! Are you going to just simply enter this market? What is the point of entering the market if you know you are going to make no profit? Double-check this week to reassure that the price of your good is more than the Average Total Cost of Production. If this is the case then welcome to the world of the competitive market!