Comprehensive Final Paper

Comprehensive Final Paper - 1 Comprehensive Final Paper...

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1 Comprehensive Final Paper Ashley Oren Parkman Grantham University
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2 ABSTRACT This paper is written to describe perfect competition and long run equilibrium as well as the proliferation of global trade and competition and how it contributes to the markets in the United States and other countries. It will also explain how and when marginal social benefits equal marginal social cost, and why it does so. Comprehensive Final Paper
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3 In America as well as other countries, the market determines success of that country. Many firms, corporations, businesses, and organizations make up the market. With an ailing market, the people of that country ail with it. This means that any social well being is affected by the market, which means that every country can only hope for a great effective economy and will do almost anything to keep their businesses prosperous and well off. Globalization is a method that works on countries that are starting to fail. This is a method that hopes to save such economies by welcoming other countries into its domestic market in hopes to increase its market, economy and even stock in their businesses. The pieces that fall into place are small however very critical. Some of the pieces are perfect competition, long-run equilibrium, and proliferation of global trade, marginal social benefit and how it affects the marginal social cost. The first piece of the puzzle is called perfect competition. According to Investopedia.com, “perfect competition is a theoretical structure. It is primarily used as a benchmark against which other market structures are compared.” (Investopedia.com, 2011). An example of perfect competition is the laundry detergent market. The key to perfect competition is the mix of buyers and sellers (Economics Basics: Monopolies, Oligopolies and Perfect Competition, 2012). Without these pieces the marketing world would be a bust. If “Tide” detergent were to increase the cost of their product by three dollars, when it was priced the same as “Gain” detergent before, buyers have the option of continuing to purchase the “Tide” brand, or they could exhibit perfect competition and go for the “Gain” which is cheaper, and still just as effective. The great thing about many markets is that there is such a large base of products out there that people have a variety to choose from. The only market that is not in perfect competition to the consumer is
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4 theoretically gas. When gas is raised in price, every company raises their price, which
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