Microeconomics Market Structures

harmonize to the principles of microeconomics commercialize placeplace coordinates foot be identified as perfect competition, oligopoly or monopoly. In our bon ton today and the way p arentage is conducted, market structures are not strictly defined by on of these particular types. They besidest end be composed of a mix of them. A market structure that has a higher(prenominal) level of competition backside be more(prenominal) efficient than those that read inflict levels of competition. We know this since lower competition increases the manufacturing businesss surplus in re contort it decreases the consumer surplus.The loss in the consumers surplus is means it go away be greater than the increase in the producers surplus. This leads to what we bedevil learned as a deadweight loss. A perfect competitive market can also be plan as the some efficient form of market, where consumers are the most beneficial. realistically it is difficult to identify and choose a perfect c ompetitive market. thoroughgoing(a) competitive markets have the following characteristics * No entry or dismissal barriers These markets should have their structures set up with no entry or transcend barriers.Simply meaning that new suppliers can invest in their comp some(prenominal) without both(prenominal) meaningful capitol or risk. They can also exit the constancy without veneer all significant loss. *Infinite buyers and sellers the markets have unlimited or myriad summations of producers that are testamenting to sell their surmountways to an unlimited or infinite amount of buyers. This is to ensure that there is no supplier or buyer has a significant market share. This is to prevent others in the market from being equal to pick up the market value. Perfect Information This is when all competitors in the market have to provide and share equal information among/between individually other. Suppliers and buyers a the like, go previous and profit from having full and complete information, just like the other suppliers and buyers in the markets. The above conditions benefit consumers as these firms develop and give way price takers. The price of the product will be decided by the provide and demand. The equilibrium point is where the supply mold and demand curve intersect and establish the market price of the product.Therefore, in all aspects of business the price is equal to marginal live. If we look at the short-term affects and whence there is the possibility for a firm to make a profit. However, this is not the traditional outcome and will quickly attract other firms in the industry. In turn it will elevate the level of supply demands. As a result of this increase, the products price will decrease. Simply meaning that in a perfect competitive market it is not feasible for a firm to profit in a long-term aspect.This doesnt needfully mean that a firm will not earn any profits. It means that the profit earned covers all the represents to produce the goods. This can include interest and li tycoon. In turn, the long-term outcome for the firm in a perfect competitive market will earn a normal profit. The profit will always be significantly slight then firms in a monopoly or oligopoly would earn. Capitalism is based on the principles of the free market. In free markets the supply and demand variables help determine the quantity of the goods produced along with its market price.There are many foreign countries and their firms that have tried to implement free markets but have not been very successful because there has never been that type of market in planetary transactions. This is because global trade and national trade are derived from the same principles. The invertebrate foot of internationalist trade is the principle of comparative advantage. Each sylvan has variant sets of resources. These variables are divergent because some countries have large populations, which influence the grok pool, especially when some people have specific developed skills in a one industry.For example, if people in Antarctica wanted to drink chocolate that would have to or import them since the climate is not conducive to evolution it. If Antarctica decided not to use international trade, they would either have to go without burnt umber or grow it in an un-natural environment. The live of emergence and providing coffee would increase the market price. Instead since Antarctica participates in international trade, they have the ability to focus and provided coffee to its countries consumers. Simply meaning that countries that have comparative advantages nab it from their products for which has the lowest opportunity exist.If these countries focus on products that create their comparative advantages then the total output would be greater for the consumers of the world than if each country tried to individually produce everything. The marginal cost or the cost of producing a new product usually cost less than the just cost of producing a good. This is because the additional production usually is achieved without making any substantial new investments. (V,Kumar, 2008). Globalization allows production to shift to the people and places that are in a position to produce the best products at the most competitive price (V,Kumar, 2008).When the total supply demanded is more, the consumers will benefit since the price will be lower. Simply meaning that in the absence of international trade, consumers around the world ended up having fewer suppliers who could provide the undeniable good to produce their products and meet their demands. Ultimately letting the supplier controls the market and its price. If we consider an assignment we have earlier in this class, let us consider the automobile industry of the 1950s and the present industry. In the 1950s there were only three companies who produced and sold cars in the United States.Based on what we learned in this class it is defined as an oligopoly. The automobile industry was a highly profitable industry in the 1950s. When international cars were trade in to the United States, they were competitively priced much lower than the cars produced on sept soil, and the imported goods had better quality with more fuel efficiency. In turn consumers quickly shifted their interests and money to the imported vehicles. This caused local anesthetic producers to be forced to lower their prices and improve their standards in order to stay competitive.International trade brought more options to consumers. Its providing higher levels of competition and improved quality and efficiency. With free international trade, producers can provide and compete for customers across the world. Consumer surplus is defined as, An economic stride of consumer satisfaction, which is calculated by analyzing the difference between what consumers are willing to feed for a good or service relativetoitsmarket price. A consumer surplus occurs when the consumer is willing to pay more for a given product thanthe current market price (Investopedia dictionary).When the number of suppliers in the industry increases it leads to higher levels of competition, and these market conditions found in a perfect competitive market end up being more profitable to consumers. Social cost are one of the variables that lack in all studies of economy however, as our society advances, so do affectionate costs and this is reflecting in the markets. We have learned a lot about comparing the cost of a product and revenue generated from it In turn if we take into account the growing effect of affectionate costs and the social benefits that can emerge from this trend.We cannot for puzzle that there are also marginal social costs. The marginal social cost becomes greater with each additional thing that happens that is considered undesirable or also knows as un-anticipated cost activity. For example, an oil smart set that is drilling essential extend i ts hours on Friday to pee the minimal amount of oil harvested. This will mean there will be a marginal cost for each additional hour the oilrig must operate to reach its quota. Marginal social cost would be the upward slope that shows the cost increasing with each additional output.Marginal benefits would be the opposite as marginal social cost with a downward slope. Environmental factors show the family connections between marginal social cost and marginal social benefit. Lets confiscate that all firms are constantly trying to reduce the level of taint that they create. This is not an over night process and it does require a significant amount of capitol. This would affect the marginal benefit. Now on a different hand lets assume that a company has been cited for not following the regulations that baffle companys pollution control. This company is now required to get up to code.They are going to have to buy the new equipment that is required. This will inflate companys costs a nd may affect the companys ability to produce their products competitively. This could create many problems for the company but will ensure they are following required rules. Since it is for the good of society it means that the marginal social cost is beneficial than the marginal social benefit. Proving that marginal social cost and marginal social benefit lines cross where the two are equal. This class have class has taught many aspects and principles of microeconomics.It began with supply and demand and ended with marginal costs and benefits. All of the principles affect local and international firms, as well as consumers that are in both places. These studies will continue to evolve as business and society moves forward in the future.Work Cited * V,Kumar, VK. (2008, July 28). Globalizationwho benefits from it. Retrieved from http//www. helium. com/items/398030-globalization-who-benefits-from-it * Investopedia dictionary. (n. d. ). Retrieved from http//www. investopedia. com/term s/c/consumer_surplus. asp