[Patton]

Study, and understand or have a degree or anything like that in Economics?

If so then would I be right in using the short run equilibrium, and long run equilibrium graphs for perfect competition in order to describe the price and output behaviour in a perfect competition market structure?


:S

 

[Patton]

..

I'm gubbed then lol

 

[Reptile_16]

Study, and understand or have a degree or anything like that in Economics?

If so then would I be right in using the short run equilibrium, and long run equilibrium graphs for perfect competition in order to describe the price and output behaviour in a perfect competition market structure?


:S

It's been a while, but yeah, sounds right.

 

[Patton]

It's been a while, but yeah, sounds right.

Cheers mate

I'll just hope my bull**** explanation is good enough to support the graphs lol

I have very mixed emotions about economics atm..some parts make me wanna top myself and then others I don't mind so much... gutted I have no choice but to study it if I want my HND lol

 

[Reptile_16]

Cheers mate

I'll just hope my bull**** explanation is good enough to support the graphs lol

I have very mixed emotions about economics atm..some parts make me wanna top myself and then others I don't mind so much... gutted I have no choice but to study it if I want my HND lol

Yup, that's economics for you. Just out of interest, what are you asked to explain, or is it the short and long-run graphs themselves?

 

[Patton]

Yup, that's economics for you. Just out of interest, what are you asked to explain, or is it the short and long-run graphs themselves?

It's following one from a previous question which I answered with relation to the perfect competition market structure.

The question or statement or whatever you wish to call it that I'm unsure about is:

"For your chosen market structure and with the aid of an appropriate diagram describe the price and output behaviour in it."

Then my lecturer type guy said he wanted us to include both the short and the long run which is why I was uncertain if it was simply the supply and demand curves intersecting one another to give an indication of price and output, with supply increasing and price falling as a consequence or the short, and long run equilibrium graphs he's after.

Mind you having said that, I would have to show the equilbrium graphs in order to highlight the abnormal profits which can be achieved in the short run hence attracting increased supply to the market.... that does make sense....right? lol

 

[Reptile_16]

Think if you've correctly identified perfect competition as the market, then the supplementary statement means you absolutely have to reproduce the short and lon-run graphs and highlight the possibility for profit-making in the short-run scenario (i.e. where P[=MC] > AC).

 

[Patton]

here's what I have said:

"The equilibrium output is at point 0B as this is the point at which marginal revenue (MR) is equal to marginal cost (MC). The shaded area in the diagram illustrates the abnormal profit which can be made in the short run when average revenue (AR) is greater than average cost (AC)."

does that make sense / sound alright?

 

[Reptile_16]

here's what I have said:

"The equilibrium output is at point 0B as this is the point at which marginal revenue (MR) is equal to marginal cost (MC). The shaded area in the diagram illustrates the abnormal profit which can be made in the short run when average revenue (AR) is greater than average cost (AC)."

does that make sense / sound alright?

Indeed. It is (of course) finally worth explaining why abnormal profits are only available for a short time.

 

[Patton]

Indeed. It is (of course) finally worth explaining why abnormal profits are only available for a short time.

:hooray:

Thank you man, appreciate the help greatly!!

:beer::beer:

 

[Reptile_16]

:hooray:

Thank you man, appreciate the help greatly!!

:beer::beer:

No problemo. Just hope (for your sake) my memory's ok. Stupidly, I had cause to try to recall the characteristics of a perfect market the other day because I was bored driving to work and decided to test whether eBay is one such example....

 

[Patton]

No problemo. Just hope (for your sake) my memory's ok. Stupidly, I had cause to try to recall the characteristics of a perfect market the other day because I was bored driving to work and decided to test whether eBay is one such example....

Thanks

haha well if it's not the worst that'll happen is I'll be made to change it and then hand it in again lol!!

characteristics or assumptions about a perfect market are:

• many firms or individuals selling identical products
• many buyers
• no restrictions to entry or exit to the industry.
• current firms have no advantage over new firms who wish to enter.
• both firms and buyers have complete knowledge of information about the market.
• no one firm can affect the market price through their own actions, they are price takers

think thats about it, interesting point about ebay, I might bring that up tomorrow and see what the lecturer says about it lol

 

[Reptile_16]

Thanks

haha well if it's not the worst that'll happen is I'll be made to change it and then hand it in again lol!!

characteristics or assumptions about a perfect market are:

• many firms or individuals selling identical products
• many buyers
• no restrictions to entry or exit to the industry.
• current firms have no advantage over new firms who wish to enter.
• both firms and buyers have complete knowledge of information about the market.
• no one firm can affect the market price through their own actions, they are price takers

think thats about it, interesting point about ebay, I might bring that up tomorrow and see what the lecturer says about it lol

The only point one might argue with is the last, on the basis that shill bidding probably takes place in more cases than the establishment would admit...

 

[Patton]

The only point one might argue with is the last, on the basis that shill bidding probably takes place in more cases than the establishment would admit...

yep, thats the only thing that I was unsure about, as you get people who will set reserves etc and then people who have something the same or similar may research the item and set a similar reserve or buy it now price - so in effect one seller can affect the price.

then again you have to look at it that people may set a reserve of a tenner, and all other items that are the exact same may sell for 3 quid leaving mr ten pound man to reduce the price or keep the item... or rip someone off on the off chance lol

 

[Reptile_16]

yep, thats the only thing that I was unsure about, as you get people who will set reserves etc and then people who have something the same or similar may research the item and set a similar reserve or buy it now price - so in effect one seller can affect the price.

then again you have to look at it that people may set a reserve of a tenner, and all other items that are the exact same may sell for 3 quid leaving mr ten pound man to reduce the price or keep the item... or rip someone off on the off chance lol

Basically it's about fair, on the basis that the market bears the price it sets for itself (i.e. that which people are willing to pay), and so Mr. Tenner may well make some sales but we all know that Messrs. Three Squid will sell 99.9% of their wares because the perfect nature of the market means buyers will find those products.

It's the "firms influencing price by their own actions" activity that IMO puts this on a real knife-edge. I've certainly made a nuisance of myself with a clutch of traders on eBay, because I used the information that used to be available in the shape of bidder history to get them banged to rights for clearly using shill bidding on multiple logins to increas their own selling price.

By and large though, people play fair I think, so it's as real-world close as you'll get...

 

[Patton]

Basically it's about fair, on the basis that the market bears the price it sets for itself (i.e. that which people are willing to pay), and so Mr. Tenner may well make some sales but we all know that Messrs. Three Squid will sell 99.9% of their wares because the perfect nature of the market means buyers will find those products.

It's the "firms influencing price by their own actions" activity that IMO puts this on a real knife-edge. I've certainly made a nuisance of myself with a clutch of traders on eBay, because I used the information that used to be available in the shape of bidder history to get them banged to rights for clearly using shill bidding on multiple logins to increas their own selling price.

By and large though, people play fair I think, so it's as real-world close as you'll get...

Very true!

god it's good to talk to someone who knows what they're on about with economics but doesn't use too much jargon lol

I never knew that kind of thing used to be up on ebay, lol, but well played for using it against people who were increasing the price of their own items, if you want a certain price sell it through buy it now option - unless that never used to exist? lol

Anyway I'm off to bed, I'm knackered, cheers for the help again mate, greatly appreciate you're time, knowledge and thoughts :beer2: