The demand curve faced by a purely competitive firm is one in which the demand for a product is greater than the supply. In the classic competitive market where the product has a competitive advantage, the supply curve is linear and at the equilibrium point, the market is saturated. In such a market, there is no price elasticity. As we will see, the demand curve faced by a purely competitive firm is nonlinear.

In this scenario we see a firm where demand for a product is greater than the supply, but the supply is saturated. And because the demand for a product is greater than the supply, the firm can’t create a competitive advantage. The market is saturated, so the firm can’t make a profit. The demand curve is nonlinear, and thus it is possible for the firm to make a profit.

It’s a situation that has been studied at length by economists. The book by Richard A. Wolff and Kenneth R. Ross, “The Demand-Side of Growth”, explores this in far more detail than we can. In the book, they explore how the demand for a particular product (the software that allows people to use a cell phone) changes over time.

The book is a great read, but I find it a little hard to understand because, as you might imagine, there’s a lot we can’t really understand about demand curves. What I do see, though, is that the demand curve is actually quite simple. Its simply a function of supply and demand. The demand curve for a given industry is the curve that shows how much of the product the firm is willing to buy at any given price.

The demand for your business is determined by the cost of the product you are supplying at the current market rate. When you have a product for which you’re getting a price that’s lower than the market rate, you have a price disadvantage.

This is a familiar problem for businesses with a market-leading product. They just can’t seem to catch up in the market and are being forced to raise prices. If your product is in demand, you have a market leader who can drive prices to the point that your competition has to raise prices to match.

The demand curve is a graphical depiction of the relationship between the price of your product and the demand for that product. If you have a product with a high demand, you’re going to find the price point where demand is highest. If you are in a position where you can sell a product at a price that is below the market rate, you are in a position of having a price advantage. The problem is that this kind of competitive advantage is not just a matter of price.

If you are in a position of having a price advantage but also have a price disadvantage, you are only one price out of a range of prices. A company that has a price advantage should be able to find and sell a product at a lower price than a company that doesnt.

Avatar photo

Radhe

https://rubiconpress.org

Wow! I can't believe we finally got to meet in person. You probably remember me from class or an event, and that's why this profile is so interesting - it traces my journey from student-athlete at the University of California Davis into a successful entrepreneur with multiple ventures under her belt by age 25

Leave a Reply

Your email address will not be published. Required fields are marked *