Exam paper---read the requirement I send you carefully Essay - 2

Exam paper---read the requirement I send you carefully - Essay Example Explanation will be given how the perfectly competitive firms response due to changes in consumer demand. Another market structure is Monopoly. In monopoly market there is only one seller in the market. The differences between the characteristics of the two markets will be discussed. In this paper, brief explanation will be given for different types of market structure. Main Body Perfect Competition Demand –Supply Equilibrium The equilibrium is a situation where the market demand is equal to the market supply. This means for a particular industry, the market demand will be equal to the market supply. Suppose the Pizza industry is providing the same supply of Pizza as compared to the demand for the product. In case of market equilibrium, there is no pressure for price change because both the consumers and producers are satisfied in this situation. There is neither excess supply in the market nor excess demand in the market (Machovec, 2002, p.19). In the above diagram, the equil ibrium has been shown by the interaction between demand and supply curve. P is the market price and Q is the quantity demanded. Market will produce OQ amount of output and the consumers will demand the same amount of output. So the price will remain same. Due to changes in any of the factors, the entire equilibrium position will get affected. It would result in either excess demand or excess supply. In perfect competition, the firms are price takers. In the short run equilibrium for perfect competition, the price is determined by the demand –supply equilibrium. P1 is the market price and each firm follows the same price. As the price is same for each unit sold the AR curve will be constant and it will be equal to the MR curve. At, MR=MC the firm maximizes its profits. In the following diagram, the profit maximizing output is Q1 and the market price is P1. The firm’s profit is shown by the shaded area. The firm earns supernormal profit because AR is more than AC. Super Normal profit In short run, there are three situations existing in the market. Super Normal Profit: When average revenue is greater than average cost (AR>AC) the firm earns super normal profit. In case of super normal profit, the existing firms earn high profit so the other players will also try to enter into the market. When the new players cut through the competition the firm again starts to earn normal profit (McEachern, 2006, p.43). Normal Profit: When Average Revenue is equal to Average Cost (AR=AC) the firm earns normal profit. Loss: When Average revenue is less than Average Cost (AR

Bayesian Estimation Essay Example | Topics and Well Written Essays - 750 words

Bayesian Estimation - Essay Example bability is a number between 0 and 1 which is used to determine, the chances of occurrence of the specific outcome, if an experiment is repeated for 100 times over and over again. The humans are always interested in finding out what happened in the past and what is going to happen in the future as well. The historical article named â€Å"The Future has already happened† delivers the idea of Bayesian statistics very adequately as it states that one can easily extrapolate future events by observing the happenings of the present. Additionally, the main difference between Bayesian and traditional statistics is simple because the former one developed techniques for interval estimation for mean, standard deviation and proportion of target populations. The interval estimation works its numbers in order to find the maximum limit and minimum boundary in between which a parametric value can assume any figure. On the other hand, the traditional statistical theory is based on the belief t hat humans can measure parametric values with perfection and therefore, its followers came up with methods that can supposedly be used in order to determine point estimates of values of the population. The science is believed to be nothing more than a best guess and the whole world is demonstrating change of one kind or another. The point estimates are going to be good for one point in time. However, an interval estimate will be applicable in the fairly distant future. The old Greek scientists were of the view that human intellect is superior and they can estimate each and every thing in the world. Muslim scholars later came up with a logic that supported presence of change in the universe and one time experiment is expected to change in terms of its results in future. Bayesian statistics argue that humans cannot know anything for certain and therefore, they work in order to perfect the estimation techniques. The natural and physical laws do not change but human behavior does as time goes by.