The paper "Principles of Micro Economics" is a wonderful example of an assignment on macro and microeconomics. United States (US) has millions of vehicles in the country which are registered. The competition in this sector is very tough. It has nearly all the major vehicles producer in the country. This has given rise to a price war and customers are getting lots of options. Some of the producers which are there are Ford Motors, General Motors, Chrysler, BMW, Honda, and Hyundai. This puts a lot of pressure on different companies. This takes the US market towards perfect competition.
It also satisfies the assumption of perfect competition as companies here earn only nominal profits. There are many producers of cars like Ford Motors, General Motors, Chrysler, BMW, Honda, Hyundai, and many others. This leaves the company with very little to alter the price. Thus the prices are very similar and there is not much difference. This makes them more of a “ price taker” . (Miller, 2008 pg 27) “ The products produced are more or less similar” (Miller, 2008, pg 32). Every manufacturer has cars in all segments.
Like in the luxury class, economy class, and so on. Their cars are also very similar with very little difference to choose from. Thus, customers have a choice to make. The information with the customer regarding the prices of the car is there. In case there is a difference then the customer has a choice to pick another. As there is complete information it creates a healthy feeling among the consumers. There is also complete information regarding the way the cars are manufactured and the technology used.
When a company supposes Ford comes with a new technology others follow suit. Thus information and technology are free to pass. There is freedom of companies to enter and exit the market. There are certain norms of the United States (US) government which the company has to adhere to and it is similar to every country has so but there is no legal barrier. This helps the company to decide its future course as there is freedom for both.
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