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Perfect Competition and Laptop Market
Perfect competition is a market that is characterized by the existence of many sellers in the market as well as many buyers. The number of buyers and sellers is large, and in such a manner that the decision of one player on either side does not influence the market. More importantly, the price is set by the market forces of demand and supply (Mankiw, 2014). To understand these characteristics in a practical scene, I reviewed an HP laptop computer as a product in the perfectly competitive market. The laptop is manufactured by Hewlett-Packard Company (HP). HP is a company that operates in the laptop and computer market that portrays the characteristics of perfect competition.
One of the main features portrayed in the computer market that HP operates on is the existence of many sellers and buyers. There are many companies that produce and sell the same computer products that HP produces. Taking the laptop market, for instance, there are players in the United States and global market that competes with HP. A few of these include Apple Inc, Dell, Toshiba, Samsung and Acer among several other players. Therefore, the decision of HP does not influence the price of supply in the market. At the same time, the buyers are many, in the United States and globally.
The market also portrays the feature of the price mechanism, where prices are set by the forces of demand and supply. There is no government interference in pricing and quality decisions of the market. At the same time, the laptop computer market has a feature of free entry and exit, where the producers are at liberty to do so. This is because their actions of entry or exist do not influence the market as there is no barrier to entry or exit. The case of the HP in the laptop computer market illustrates the practical nature of the perfect competitive market.
References
Mankiw, N. (2014). Principles of Microeconomics. New York: Cengage Learning