Perfect Competition

Perfect competition in the short run capital is constant. In the long run price and capital vary, due to low varies to entry for numerous firms. Entering the market and exiting the market due to the amount of people in the market is perfect competition is set into play. Prices are lowered due to the high amount of competition prices are also lower due to lots of competition. But for a firm the lowest they are able to drop the prices is where they are functioning at marginal cost. If a firm drops its prices lower then there marginal cost then the firm will be forced to exit the market due to negative profits. (MR=MC) is where a firm should be functioning. One possibility is that these businesses are experiencing some kind of monopoly power, or control over price in long run. This would make perfect sense if the farmers were part of a union, sharecropping community, protected by government regulation or maybe a local farmer’s market. Does this imply brand loyalty? Does this imply that the farmers are a Monopolistic Market (Monopolistic Competition)? We can characterize them as in monopolistic competition especially if they are a farmer’s market because in that case, advertising creates brand loyalty. In the article these firms are monopolistic competition. These firms are able to be a monopolistic competition because they have brand loyalty. On order for prices to be higher than marginal cost we expect for brand loyalty to h9old price higher. If they are high the marginal revenue will also be high. In order for a firm to invest in more capital than profits will have to be positive and high. A firm will definitely invest in capital because profits will be guaranteed to the firm in the long run. One possibility is that these businesses are experiencing some kind of monopoly power, or control over price in long run. This would make perfect sense if the farmers were part of a union, sharecropping community, protected by government regulation or maybe a local farmer’s market. Does this imply brand loyalty? Does this imply that the farmers are a Monopolistic Market (Monopolistic Competition)?
We can characterize them as in monopolistic competition especially if they are a farmer’s market because in that case, advertising creates brand loyalty. A firm would invest in more capital because the profits will be guaranteed in the long run for the firm. Because profit is zero in the long run, and we know these businesses are in the long run, how can it possibly make sense that they are experiencing higher profits?


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