The fact that there are "many firms" gives each MC firm the freedom to set prices without engaging in strategic decision making.The requirements assures that each firm's actions have a negligible impact on the market. 3.Free entry and exit In the long run there is free entry and exit. There are numerous firms awaiting to enter the market each with its own "unique" product or in pursuit of positive profits and any firm unable to cover its costs can leave the market without incurring liquidation costs. This assumption implies that there are low start up costs, no sunk costs and no exit costs. 4.Independent decision making Each MC firm independently sets the terms of exchange for its product.
Because there are no barriers to entry, anyone can enter the industry without having to risk a large amount. Because there is only one company in a monopoly, they are able to set their own price without having to risk losing buyers to a different seller. Perfect Competition industries on the other hand, must take the price that is set by the market thus making them price takers. Companies that are a monopoly function to acquire a positive economic profit and will chose which output to produce by seeing where marginal cost and marginal revenue are equal. Because marginal cost is always below the price set by consumer demand, monopolies will always receive a positive profit.
The fact is, this industry had a clear market advantage, as cement is a mature product that needs little research and is globally perceived by customers in all the same way. Therefore, as it doesn’t require high skilled labor, CEMEX could locate their plants in low-cost regions.
It is economically stable, everyone appears to be treated equally, and there are no religious conflict because they all share in one religion. Everyone appears to be genuinely happy with how they are treated. They do not great the king by throwing “themselves upon their knees or on their stomachs” (Voltaire 68) but rather to kiss him on each cheek. The great crowns officers were made up of both sexes (67). They do not need a court of “justice, prisons or a parliament” because “they were strangers to lawsuits” (68).
WHAT IS CLEAN SURPLUS? Clean Surplus is a little known accounting method designed to provide predictability for the investor. It is an extremely accurate method that allows us to compare the operating efficiency of each and every company in the exact same manner. The traditional accounting statements do not develop the book value (Owners’ Equity) in the same manner for any two companies. Clean Surplus does indeed allow the exact, identical development of book value (Owners’ Equity) for each and every company.
In perfect competition, all the typical competitors are earning the normal profit and there are few repeating steps in the process. There are several ways to escape from this. One of the methods is by applying the theories of monopolistic competition model in the market. Under monopolistic competition, non-price competition is the marketing technique which helps those typical producers to escape from perfect competition. Perfect competition In perfect competition, there are 4 main assumptions in the market: Price taker, freedom of entry, identical product and perfect knowledge.
Industry structure is categorized on market structure variables, which are believed to determine the extent and characteristics of competition. Those variables, which have received the most attention, are number of buyers and sellers, extent of product substitutability, costs, ease of entry and exit, and the extent of mutual interdependence [Baumol, 1982; Colton, 1993]. In the traditional framework, these structural variables are distilled into the following taxonomy of market structures: These four market structures each represent an
McAlsan beer also had the added value of being brewed without any additives or preservatives. The outcome of McAuslan’s strategy was indeed a competitive advantage. The breweries product was instantly valued by customers. Furthermore McAuslan clearly differentiated itself from the competition. McAulsan’s competitive advantage could not be imitated at the time as they were filling a very distinct niche, that of supplying distinctive tasting local beer.
These materials are homogeneous, standardized and are readily available from a lot of suppliers. In addition, there is little switching costs involved for incumbents to switch from one supplier to another, so the incumbents have a lot of alternatives to choose from thus limiting the bargaining power of concentrate suppliers. Although end buyers of soft drinks have a lot of alternatives to choose from and have almost no switching cost from choosing among these undifferentiated drinks, they still possess low buyers’ bargaining power. Since there are numerous small consumers out there in the market, the choice of one consumer does not have much influence over the profitability of the whole industry. So buyers cannot force the price of soft drinks up if they threat to turn to other drink producers.
It depicts a linear relationship theory between return and risk (or mean-variance relationship) based on the underlying assumptions: (1) All investors are risk-averse and would choose an efficient portfolio that would maximise their end-of-period expected utility (the marginal utility decreases as wealth increases); (2) All investors have the same one-period investment horizon; (3) All investors measured portfolio performance solely based on mean and variance (return and risk) and they all have homogenous expectations on the distribution of the end-of-period future returns; (4) There is no friction in the trading of financial assets such as the absence of taxes or transaction costs, and that the financial market is informationally efficient; and, (5) All investors can choose to invest in any financial assets, and they may borrow or lend any amount of money at the rate similar to risk-free rates. Under these assumptions, the CAPM shows that the expected return for an asset or portfolio i is related to the expected excess return of the market portfolio adjusted for the systematic risk of the asset or portfolio, commonly represented