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"If real world markets can be made to resemble more closely the economists model of perfect competition, economic efficiency will improve"

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Introduction

"If real world markets can be made to resemble more closely the economists model of perfect competition, economic efficiency will improve" Perfect competition would exist when there are a large number of small firms all producing a homogenous product, and not one firm in the market has monopoly power to amend prices. These companies are competing against each other on the production costs and also the retail price. For an industry to be perfectly competitive then several assumptions need to be made these are that there are a very large number of buyers and sellers and none of the buyers or sellers can influence the ruling market price by their actions. All the buyers and sellers possess perfect market information and the goods they are providing are homogenous. Finally there are few barriers to entry and exit of the market. I use the term "would exist" simple because an industry performing under perfect competition is simply not feasible. There are a number of types of efficiency these include; Dynamic efficiency is concerned with how resources are allocated over a period of time, for example there ...read more.

Middle

When a firm is running in an industry of perfect competition then it's short run output will look like the following; Whereas in the long run it will look like; In conclusion a firm in perfect competition will have to become more efficient or it will be driven out of business by its competitors. "Assess the extent to which developments in Information Technology, such as the Internet are making markets more competitive" The term perfectly competitive refers to a number of small firms all selling the same product and therefore just competing on the price of the product. Technology can help make these markets more competitive by using different mediums to reach a larger target audience. This is mainly to do with the marketing of the products; it can be performed in a number of ways, on the television, on the radio, on the Internet as well as via traditional methods. The Internet could be described as a worldwide advert, as a large majority of the web sites are either marketing or selling different products and services. ...read more.

Conclusion

these people do not have to go to a store and buy the products then the fixed costs of the firms are lower so they can offer the products cheaper. The Internet is developing all the time so the nature of the competition is also going to be changing; currently it is on the price and the marketing of the products. But in the future who knows how the firms are going to compete other than on the price. However it is not just the Internet that is making markets more competitive, Electronic Point of Sale technology allows firms to monitor how the products are selling. In conclusion I think that the Internet has revolutionised how we buy products now, it offers the products cheaper than in normal shops and saves you the hassle of going to the shop. I feel that can only get better for buying online. However there are other issues surrounding the buying of goods online, mainly the security of your credit details, nonetheless these are slowly being fixed and the internet should be a safe place to shop in the future. ...read more.

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