Use The Chart Regarding A Perfectly Competitive Yoyofactory
Introduction
A perfectly competitive market is a market structure where there are many small firms producing identical goods and services, and no single firm has any market power. In a perfectly competitive market, firms are price takers, meaning they have to accept the market price for their products. Yoyofactory is a manufacturer of yo-yos that operates in a perfectly competitive market. This article will use a chart to explain how Yoyofactory operates in a perfectly competitive market.
The Chart
The chart below shows the demand and supply curves for Yoyofactory's yo-yos:
The demand curve shows the quantity of yo-yos that consumers are willing to buy at different prices. As the price of yo-yos decreases, the quantity demanded increases. The supply curve shows the quantity of yo-yos that Yoyofactory is willing to produce at different prices. As the price of yo-yos increases, the quantity supplied increases.
Market Equilibrium
The point where the demand and supply curves intersect is called the market equilibrium. At this point, the quantity of yo-yos demanded by consumers is equal to the quantity of yo-yos supplied by Yoyofactory. The market price for yo-yos is also determined at this point.
The market equilibrium for Yoyofactory's yo-yos is where the demand and supply curves intersect at a price of $5 and a quantity of 100 yo-yos.
Changes in Demand
If there is a change in demand for Yoyofactory's yo-yos, the demand curve will shift to the left or right. If the demand for yo-yos increases, the demand curve will shift to the right, as shown below:
At the new market equilibrium, the price of yo-yos increases to $6 and the quantity sold increases to 120 yo-yos.
If the demand for yo-yos decreases, the demand curve will shift to the left, as shown below:
At the new market equilibrium, the price of yo-yos decreases to $4 and the quantity sold decreases to 80 yo-yos.
Changes in Supply
If there is a change in supply for Yoyofactory's yo-yos, the supply curve will shift to the left or right. If the supply of yo-yos increases, the supply curve will shift to the right, as shown below:
At the new market equilibrium, the price of yo-yos decreases to $4 and the quantity sold increases to 120 yo-yos.
If the supply of yo-yos decreases, the supply curve will shift to the left, as shown below:
At the new market equilibrium, the price of yo-yos increases to $6 and the quantity sold decreases to 80 yo-yos.
Conclusion
Understanding how Yoyofactory operates in a perfectly competitive market is important for anyone interested in economics or business. By using the chart above, we can see how changes in demand and supply affect the market equilibrium for Yoyofactory's yo-yos. By studying this chart, we can gain a better understanding of how perfectly competitive markets work and how firms like Yoyofactory operate within them.