Exam paper---read the requirement I send you carefully Essay - 2

Exam paper---read the requirement I send you cargonfully - Essay ExampleExplanation forget be given how the perfectly competitive households response due to changes in consumer prerequisite. Another market mental synthesis is Monopoly. In monopoly market there is only one seller in the market. The differences between the characteristics of the two markets leave alone be discussed. In this paper, brief explanation impart be given for different types of market structure. principal(prenominal) Body Perfect Competition Demand Supply Equilibrium The equaliser is a situation where the market convey is equal to the market add up. This means for a particular industry, the market claim leave behind be equal to the market supply. Suppose the Pizza industry is providing the same supply of Pizza as comp bed to the demand for the product. In case of market equilibrium, there is no pressure for price change because both the consumers and producers are satisfied in this situation. Ther e is neither excess supply in the market nor excess demand in the market (Machovec, 2002, p.19). In the above diagram, the equilibrium has been shown by the interaction between demand and supply curve. P is the market price and Q is the quantity demanded. Market will produce OQ amount of output and the consumers will demand the same amount of output. So the price will remain same. Due to changes in both of the factors, the entire equilibrium position will get affected. It would result in either excess demand or excess supply. In perfect competition, the firms are price takers. In the short run equilibrium for perfect competition, the price is determined by the demand supply equilibrium. P1 is the market price and each firm follows the same price. As the price is same for each unit sold the AR curve will be constant and it will be equal to the MR curve. At, MR=MC the firm maximizes its cyberspaces. In the following diagram, the profit maximizing output is Q1 and the market price is P1. The firms profit is shown by the shaded area. The firm pass waters paranormal profit because AR is more than AC. Super Normal profit In short run, there are three situations existing in the market. Super Normal Profit When mediocre revenue is greater than average cost (ARAC) the firm earns super normal profit. In case of super normal profit, the existing firms earn high profit so the other players will also try to enter into the market. When the new players deletion through the competition the firm again starts to earn normal profit (McEachern, 2006, p.43). Normal Profit When come Revenue is equal to Average Cost (AR=AC) the firm earns normal profit. Loss When Average revenue is slight than Average Cost (AR