Lieza, just a quick question (the beginning of many)lol...on page eight of the textbook, underneath the subtitle Market price. It states "In a perfectly competitive market, a single price - the market price - will usually prevail." My question is, does this make the market price in a competitive market the equilibruim, seeing that the definitions are quite alike? Or can there at times be a diffrentiation between the two? And if so, what happens then?
Hi Grant. The keyword here is "usually". When a change in demand or supply occurs, there would be a change in the market price. Initially, disequilibrium will occur. Untill supply and/or demand equalizes out, equilibrium will be established once again and the market price will prevail.
Have a look at the graph I posted on the blog home page. This should create a clear picture.
Thanks, makes more sense with a graph to look at.
Why is it when current output is less than the profit-maximising output, then marginal revenue is greater than marginal cost? My mind can't wrap around this one...didn't know there was a mobile version of your website...nice:)
Figured it out, that question had to do with monpolies. And that's one of their characteristics.:)
With regards to Charlotte's question surrounding Activity 9.1, please see the downloads tab for the word document explaining how to do the calculations. Grant, please see the explanation at the graph on page 420 and below the graph as well. Please let me know if it is still unclear.
Good luck with your exams!
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