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Business Economics FYBCOM Sem 2 PDF Free Download, Business Economics 2 2017-2018 B.Com (General) Semester 2 (FYBcom) question paper with PDF download
Monopoly Models And Perfect Competition Are Two Extreme Examples. – Profit Maximisation And The Supply Curve Of A Competitive Company Short Run And Long Run Equilibrium Of A Corporation Under A Monopoly, As Well As The Equilibrium Of An Industry. Monopolistic. Sources Of Monopoly Power.
Monopolistic Competition: The Equilibrium Of A Business Under Monopolistic Competitions, Monopolistic Vs Perfect Competition, Excess Capacity And Inefficiency, And The Argument Over The Role Of Advertising Are All Examples Of Competitive And Monopolistic Components Of Monopolistic Competition (Topics To Be Taught Using Case Studies From Real Life Examples).
Oligopolistic Market: Oligopoly’s Main Characteristics- Markets With And Without Collusion Between Oligopolies Price Leadership Models, Cartels, And Price Rigidity (With Practical Examples).
Cost-plus (Full Cost)/mark-up Pricing, Marginal Cost Pricing, Markup Pricing, Discriminating Pricing, Multiple-product Pricing, And Transfer Pricing Are Examples Of Cost-oriented Pricing Strategies (Case Studies On How Pricing Methods Are Used In Business World).
The Purpose And Significance Of Capital Budgeting, The Stages Involved, And The Methods For Valuing Investments (Payback Period, Net Present Value, And Internal Rate Of Return) Are All Covered (With Numerical Examples).
The Late Nineteenth Century Is When Perfect Competition Theory First Emerged. Léon Walras Provided The First Detailed Description Of Perfect Competition And Some Of Its Primary Outcomes. Later In The 1950s, Kenneth Arrow And Gérard Debreu Further Developed The Idea. However, Markets Are Never Completely Efficient.
A Market With Perfect Competition Is Purely Speculative. Although There Are Numerous Manufacturers In This Market, They Could Also Encounter Many Enterprises Providing Very Identical Items, In Which Case They Often Behave As Price Takers. Commonly, Agricultural Markets Are Cited As An Example.
Because Rival Businesses In The Market Put Pressure On Other Businesses To Accept The Going Rate, A Completely Competitive Company Is Often Referred To As A Price Taker. In A Market With Perfect Competition, A Company That Attempts To Increase The Price Of Its Product Would Completely Lose All Of Its Market Share.
In A Market Where There Is Perfect Competition, The Market Supply And Demand, Rather Than A Specific Company Or Seller, Decide The Market Price. We Will Attempt To Explore Price Determination And Industry And Company Equilibrium Under Perfect Competition In More Detail Later In This Chapter.
Large Number Of Buyers And Sellers: The Number Of Buyers And Sellers, Or Participants, Is The First And Most Crucial Aspect Of Ideal Competition. With Ideal Competition, There Are Many Buyers And Sellers.
The Presence Of Such A Vast Number Of Consumers And Sellers Has No Impact On The Product’s Pricing. Because The Individual Company Under Perfect Competition Has No Control Over The Price, He Is A Price Taker. Every Company Is Obligated To Adhere To The Price That The Market Demand And Market Supply Together Determine.
Products That Are Homogeneous Or Similar: The Product Being Offered In The Market Is The Second Crucial Component Of Perfect Competition. It Implies That The Good Or Commodity Being Offered In Full Competition Is Comparable To Or Identical To Another In Nature.
Because The Items Are A Perfect Equivalent For One Another And Are Same Or Similar In Nature, The Company Has No Influence On The Pricing Of The Product. Due To The Homogeneity Of The Product, No Company May Attempt To Charge A Customer A Price That Is Different From The Market Price.
Free Entrance And Departure Of Firms: There Are No Barriers Preventing Firms From Entering Or Leaving The Market. The Need Of A Firm’s Free Entrance And Departure Only Applies Over The Long Term; In The Near Term, Businesses Cannot Adjust The Size Of Their Factories, Much Alone Allow New Businesses To Enter Or Existing Businesses To Quit The Market. In The Long Run, A New Business Will Be Drawn To The Market If The Current Old Firm Makes Supra Normal Profits In The Near Term.
Complete Market Information: It Is Considered That Both Buyers And Sellers In A Perfect Competition Have Comprehensive Awareness Of The Market Condition. A Thorough Understanding Of The Market’s Supply And Demand, Pricing, And Other Factors. This Enables Businesses And Customers To Decide How Best To Affect Market Demand And Supply As A Whole.
Perfect Factor Mobility: In A Market With Perfect Competition, All Of The Manufacturing Inputs Are Believed To Be Freely Movable. It Is Considered That Production Factors Like Labour And Capital Are Mobile. The Flexibility Of The Elements Enables The Company To Adapt Market Demand To Changes In Market Supply. No Transportation Costs: In The Case Of Perfect Competition, It Is Believed That There Are No Transportation Costs. It Is Applicable When The Manufacturing Area And The Sales Market Are Located Close Together Or In The Same Region. For Instance, Agricultural Goods May Be Marketed Locally In A Village Or Town, Saving On Transportation Expenses.
Any Company That Goes Into Business Has Profit As Its Primary Goal. Each And Every Company Strives To Bring In The Most Revenue Feasible. Firms Make A Profit When The Total Revenue Generated Is Less Than The Whole Cost Of Production That Was Incurred.
As A Result, We State That The Price In A Market With Perfect Competition Is Equal To The Typical Revenue That A Business Generates. In A Market With Perfect Competition, A Company Seeks To Maximise Profits. A Company May See Earnings In The Short Term That Are Positive, Negative, Or Zero. Long-term Economic Earnings Generated By The Company Will Be Zero.
In The Short Term, If A Company Has Negative Economic Profit, It Is Argued That The Owner Should Keep The Business Open If The Price Is More Than The Average Variable Cost, And Close It Down If The Price Is Lower.
The Difference In Total Income From An Extra Unit Of Production Sold On The Market For Which The Company Bears Marginal Cost Is Known As Marginal Revenue (Mr).
In A Market With Perfect Competition, Businesses Adjust Prices Such That Marginal Revenue Equals Marginal Cost (Mr=mc). The Slope Of The Revenue Curve, Which Also Includes The Demand Curve (Dd), Price (P), And The Marginal And Average Revenue Curves, Is Known As The Mr Curve. As A Result, A Company May Have Positive, Zero, Or Negative Economic Earnings In The Near Term. The Company Is Profitable When The Price Is Higher Than The Average Total Cost. The Company Is Losing Money In The Market When The Pricing Is Lower Than The Average Total Cost.
In The Near Term, Perfect Competition Allows For The Possibility Of An Individual Corporation Turning A Profit. This Situation Is Shown In Diagram 9.1 Above Because The Average Price, Represented By P, Is Higher Than The Average Cost, Denoted By Ar.
If Businesses Want To Make Long-term Economic Gains, More Businesses Will Eventually Join Perfectly Competitive Markets, Moving The Supply Curve To The Right Of Where It Was Initially. The Firm’s Equilibrium Pricing Will Decrease As The Supply Curve Moves To The Right. Economic Profits Will Eventually Reach Zero As The Price Declines.
When The Price Is Below The Average Total Cost Of Manufacturing, The Business Is Losing Money. If Businesses In A Completely Competitive Market Experience Long-term Losses, More Businesses Will Exit The Market, Which Will Cause The Supply Curve To Move To The Left Of The Picture. The Price Will Increase When The Supply Curve Changes To The Left. The Economic Profits Will Climb Along With The Price Until They Reach Zero.
In The Long Term, Businesses Operating In A Market With Perfect Competition Won’t Make Any Money. The Intersection Of The Demand Curve (Price) And The Marginal Cost (Mc) Curve At The Minimum Point Of The Average Cost (Ac) Curve Is The Long-run Equilibrium Point For A Completely Competitive Market.
In The Long Term, Perfect Competition Is Impossible Since Economic Profit Cannot Remain Constant. The Demand Curve Of Any Individual Business Will Change Downward With The Arrival Of Additional Companies Into The Market, Lowering The Price, The Average Revenue (Ar), And The Marginal Revenue Curve (Mr). The Company Will Never See An Economic Profit In The Long Term. At Its Lowest Point, Its Average Total Cost Curve Will Hit Its Horizontal Demand Curve (E).
At Point (E), When Marginal Revenue (Mr) Is Tangent To Marginal Cost, The Company Is In Equilibrium (Mc).
In The Short Term, Enterprises Are Only Able To Alter Their Production Level By Changing The Quantities Of Variable Variables Like Labour And Raw Materials, While Fixed Components Like Capital Equipment, Machinery, Etc. Stay Constant.
To Put It Another Way, The Short Run Is The Theoretical Time Period When At Least One Production Element Has A Set Quantity And The Other Factors Are Variable.
A Company Is In Equilibrium In The Short Term When Its Margins Of Revenue And Costs Are Equal, Or When Mr=mc, And Either Mc Is Rising At The Point Or Mr Is Being Reduced From Below.
The U-shaped Cost Curve Governs How The Company Behaves In A Perfect Competitive Environment. Under Perfect Competition, Marginal Revenue Is Equal To Price Or Average Revenue, Hence The Company Will Set Marginal Cost And Price Equal In Order To Reach The Equilibrium Level Of Production.
A Company That Is In Short-term Equilibrium Under Perfect Competition Need Not Be Profitable. The Company Establishes The Production And Price Levels That Are In Equilibrium And Then Attempts To Make An Excess Profit, A Regular Profit, Or Even A Loss. The Short-term Equilibrium Position Of The Company Is Described In Diagram 9.3 Below.
In The Fig. Above The X Axis Represents Output Level, While The Y Axis Represents Price.
The Offered Fig. Above May Be Used To Understand How The Company Could Experience Excess Profit, Typical Profit, Or Even Loss.
As A Result, The Business Experiences Short-term Price Op Equilibrium And Makes Srep Amount Of Profit, Which Is The Excess Profit, Also Known As Super Normal Profit.
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