Question

Write a short essay)

Is apple computer a perfectlu competitive firm? Why?

Answer 1

Apple computer is not a perfectly competitive product in short run. Perfect competition exists when the products are perfect subsititues of each other and can be used interchangeably . But in this fast growing world of technology where every day a new product or the same product with added features is being introduced in market, it is difficult to assume that we can perfectly subsitute a latest computer with a 5 year old computer though vice versa is done .

so Apple computer is a monopolistically competitive product ie by branding and advertising ,Apple tries to differentiate its computer from Dell or HP.

such type of markets have no perfect subsitutes , there is always consumer preference that exsists which might be indfluenced by cut throat advertising , discounts etc.

also in such types of market , it is not the price that is used for differentiating , rather the non price differences like tastes and preferences

Though if we look at the long run market , monoploistically competitive market is almost similar to perfect competition. morever at the end it is the brand loyalty that matters ie despite the price increase , the consumer prefers the one he is always using .