Business Environment Essay Example | Topics and Well Written Essays - 1500 words - 4

profession Environment - Essay ExampleThis lies solely as a theoretical benchmark of measuring implementation of companies operating under perfect controversy. In practice, one of the many deviations whitethorn be the possibility and that the firms and customers whitethorn non have perfect information about the marketplace. Some firms operating in the market whitethorn not have access to information that older firms do (Rees et al, 2005). Similarly, customers in emerging markets may also be at a lower access to information about the products and the industry than already highly-developed and mature markets. This will lead to a change in structure of the theoretical perfect competition structure.Moreover, the imbalance in perfect information may also affect other factors such as the firms being charge takers and barriers to exit and entry may persist for some firms while others may not face the same consequences. Firms may not exactly be operating on the floating prices as many market prices may be either exaggerated or deflated due to an boilers suit nature of the industry at a given time. Many firms may drastically lower their prices in order to beat upcoming competition and if a new entrant takes the floating price at that time to try to equate marginal cost to marginal profit- it may lead to a want run closure of that new entrant (Worthington, 2006).Furthermore, pessimism and optimism in the market may also lead the market to deviate from the perfect competition theory as the cost of factors of output signal along with the floating price in the market may be perceived by the customers and firms in a different personal manner both in the long and the short run. Many firms, therefore, may (along with the industry as a whole) may start functioning as a price setter rather than a price taker as generally assumed by the theory of perfect competition (Rees, 2005).Building upon supply and demand of the factors of production and the supply and demand of t he product itself, the