Denzel Partnership presents on their new sushi business Sushi 360o operating in a market of perfect competition. Key characteristics of this market include fierce competition where advertising is useless, demand is extremely elastic, and all products are substitutable. Firms are price takers with easy entry and exit into the long-run market equilibrium where price equals average and marginal costs. The business advantages of this market include low barriers to entry, necessity for efficiency, and access to a large market. However, disadvantages include lack of control over the market and small returns.

5. Quantity Cost P = MR= AR= D Long run equilibrium in perfect competition MC AC Qe 0

6. Long-run equilibrium (industry) Price Quantity S D 0 P Q^ (industry)

7. Cost Quantity P = MR= AR= D MC AC Q1 C P1 Firm in perfect competition making supernormal profit 0

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. Short-run losses Cost Quantity C P Q Loss MC AC P=MR=AR=D

10. Break-even price Cost Quantity MC AC P=MR=AR=D

11. Shut down point Cost Output MC AC P=MR=AR=D AVC C E D B P A P1 Q 0 Loss