'If I don't dream of the Ideal, how can I take my first step' Mallika Sarabhai

 

A Level Economics 36: The Assumptions of Perfect Competition

Perfect competition is a theoretical market structure characterized by several key features and assumptions. In a perfectly competitive market, there are many buyers and sellers dealing with identical or homogenous products. Each firm is a price taker, meaning it has no influence over the market price, and there are no barriers to entry or exit for new firms. Additionally, perfect information is assumed, implying that buyers and sellers have access to all relevant market information.

Underpinning Assumptions of Perfect Competition:

1. Many Buyers and Sellers:

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   • Assumption: There are numerous buyers and sellers in the market, and no single buyer or seller can significantly influence the market price.
   • Importance: The presence of many buyers and sellers ensures that no individual firm has market power to manipulate prices. This fosters intense competition, benefitting consumers with lower prices and greater product availability.
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2. Homogeneous Products:

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   • Assumption: All firms in a perfectly competitive market produce identical products, making them perfect substitutes for buyers.
   • Importance: Homogeneity eliminates product differentiation and branding competition. Consumers make decisions solely based on price, leading to price-based competition that benefits consumers.

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4. Price Takers:

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   • Assumption: Each firm is a price taker, meaning it must accept the market-determined price for its output and cannot influence the price through its individual actions.
   • Importance: Being a price taker eliminates pricing power and ensures that all firms face the same market price. This promotes efficient allocation of resources and prevents price manipulation.

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6. Free Entry and Exit:

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   • Assumption: There are no barriers to entry or exit for new firms to enter or leave the market.
   • Importance: Free entry and exit enable new firms to enter the market if there are profits to be made or exit if there are losses. This ensures that profits are driven down to normal levels in the long run, benefiting consumers with competitive prices.

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8. Perfect Information:

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   • Assumption: Buyers and sellers have access to complete and accurate information about product quality, prices, and market conditions.
   • Importance: Perfect information ensures that buyers can make informed decisions and choose the best products and prices available. Likewise, sellers can efficiently allocate resources based on market demand and conditions.

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10. Perfect Factor Mobility:

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    • Assumption: Factors of production, such as labor and capital, can move freely between industries without any restrictions or costs.
    • Importance: Perfect factor mobility ensures that resources can be allocated efficiently to their most productive uses, resulting in optimal output and minimizing waste of resources.

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12. Zero Transport Costs:

    • Assumption: There are no transportation costs involved in moving goods and services between locations.
    • Importance: Zero transport costs enable the efficient movement of products and resources, leading to uniform prices across the market and avoiding regional price disparities.

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14. Rational Actor:

    • Assumption: All economic agents, including consumers and firms, are rational and act in their self-interest to maximize their utility or profits.
    • Importance: Assuming rational actors allows economists to analyze how individuals and firms make decisions based on cost-benefit analysis and react to changes in market conditions.

Example: Agricultural Commodities Market

Agricultural commodities like wheat, corn, or soybeans often exemplify perfect competition. In these markets, there are many farmers (sellers) and buyers, and each farmer produces the same commodity. Buyers, such as food processing companies or exporters, have access to perfect information about market prices and product quality. Individual farmers cannot influence market prices and must accept the prevailing price for their crops. Moreover, factors of production like labor and machinery can move freely between farms without any constraints, and there are no transport costs involved in moving agricultural products to the market.

The assumptions of perfect competition are vital because they create an ideal benchmark for understanding how competitive markets function. While perfect competition may not fully exist in the real world, understanding its underpinning assumptions helps economists analyze market dynamics and assess the impacts of market imperfections, such as monopolies or oligopolies. Moreover, perfect competition serves as a standard to measure the efficiency of other market structures and helps identify areas where regulatory intervention may be necessary to enhance consumer welfare and overall market efficiency.

Never Meet Your Hero

The saying "Never meet your hero" is a cautionary advice that suggests it's best to avoid meeting or getting too close to someone you greatly admire or look up to. The underlying idea is that meeting them in person may shatter the idealized image you have of them, leading to disappointment, disillusionment, or a loss of respect.

Here are a few reasons why this saying holds some truth:

1. Idealization: When we admire someone from a distance, we tend to create an idealized version of them in our minds. We focus on their achievements, talents, and positive qualities. However, meeting them in person may reveal their flaws, shortcomings, or simply the fact that they are human like everyone else. This contrast between the idealized image and reality can be disheartening.

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3. Unmet Expectations: Meeting your hero can come with high expectations. You might anticipate an extraordinary experience or hope for a deep personal connection. However, in reality, the interaction may not live up to your expectations. They may not meet your assumptions or be as interested in engaging with you as you had hoped. This discrepancy can be disappointing and lead to a sense of letdown.

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5. Human Imperfection: Heroes, like all humans, have their flaws and make mistakes. By meeting them, you become more aware of their imperfections, which can tarnish the pedestal on which you had placed them. You might discover they hold different beliefs, behave in ways that clash with your values, or have made questionable decisions. This revelation can be disillusioning and alter your perception of them.

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7. Loss of Mystery: Part of the allure of heroes lies in the mystery and intrigue surrounding them. When you meet them and learn more about their personal lives, their struggles, and their everyday routines, the enigma may dissipate. This loss of mystery can diminish the charm and fascination you had felt toward them.

It's important to note that while this saying holds some truth, it doesn't mean that meeting your hero will always result in disappointment. Some people have positive experiences and develop deeper admiration and respect for their heroes after meeting them. However, the saying serves as a reminder to be prepared for the possibility that reality may not match your expectations, and it encourages appreciating and respecting people for their accomplishments while acknowledging their humanity.

Likely Scenarios after the Brexit vote?

By Girish Menon

Now that a majority of Britons have voted to leave the EU, Nigel Farage has denied his claim to fund the NHS, David Cameron has resigned and the markets have fallen; so what happens next?

Scenario 1: The Status Quo

The Conservative party will elect a leader who will try to develop a national consensus on the EU. . S/he will then embark on negotiations with the EU and this time the spooked EU leaders will concede enough to make a difference. S/he will conduct another referendum in 1-2 years time and the UK will continue to be a part of the EU.

Scenario 2: The Nightmare

True Eurosceptics with strong neoliberal leanings will come to power. They will fan xenophobic forces to mask the budget cuts to public services. They will negotiate trade deals from a weak position, dilute workers' rights and help their rich funders convert England into another Russia.

Scenario 3: The Ideal

There will be intense and honest soul searching across the EU. A realisation will dawn that inequality is the major cause for the rise of fissiparous forces. The EU will become a transparent organisation with accountability. It will ensure a Universal and Unconditional Basic Income, Free Education, Free Health and subsidised Housing for all its citizens.

There could be many more scenarios which will be variations on the above themes. I hope the EU will choose scenario 3 but as a betting man I think it will choose scenario 1. The case for scenario 1 becomes stronger as the government is in no hurry to invoke Clause 50 which is the next step to start the Brexit negotiation and Boris Johnson appears subdued after the victory.

Where Do High Class Spinners Pitch the Ball?

In another guest article, club left arm spinner AB talks us through exactly where to land the ball to cause maximum damage to batsmen’s averages. Courtesy Pitchvision Academy

We all know the key to top quality spin bowling is to bowl a consistent line and length. But what does that actually mean?

First we need to figure out where is the best length to bowl.

We want a length that is full enough that the batsman is forced to come forward, but not so full that he is able to reach the ball on the half volley without mis-hitting it.

Consider that the average spin bowler delivers the ball at approximately 50mph, and that after bouncing the speed of the ball is reduced by about 50%. This translates to a speed of about 10 metres a second. The average reaction time of a human is 0.2s. If we pitch the ball within 2 metres of the batsman, then he will be unable to play back as he would simply not have time to react to any movement off the pitch.

Therefore the maximum distance away from the batsman's stumps that we should land the ball, given that he will move back one foot when playing back, is approximately 11 foot. Anything shorter than 11 foot and the batsman will be able to play comfortably off the back foot.

 How about minimum distance?

A batsman playing on the front foot normally plays the ball about 3 feet in front of his crease. The ideal location to pitch the ball is the one at which the ball has just turned enough to hit or just miss the edge of the bat. On a normal pitch, we will find the ball turning something in the order of 5 degrees, which translates to about 1 inch sideways for each foot after bouncing.

Therefore we need to pitch the ball between 2 and 4 foot in front of the bat (8 to 10 foot from the stumps) in order to take the edge.

On a turning track, a ball pitching only a foot in front of the bat would be sufficient to threaten the edge.

The best length on this pitch would therefore be between 7 and 9 foot from the batsman's stumps. So the spin bowler has an area of about 4 feet, or just over a metre, in which to aim: anything inside this will pose the batsman problems.

------Also read

What India's spinners are doing wrong

Good Length and Right Speed

Spin and the art of attack

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Spinner’s line

No matter the pitch, the ball will not always turn a consistent amount. This variability of turn is major positive factor for the spinner. If he can't predict what will happen, how can the batsman be expected to?

A competent batsman will most likely play the percentages and play for a small amount of turn when defending off the front foot, reducing the likelihood of a ball that turns just 1 or 2 inches catching the edge. However, the inadvertent result of this is that now both the big turning delivery and the straight ball are the potential wicket taking deliveries. The spinner must always take advantage of this by ensuring that every time the ball beats the bat, whether the inside edge or outside edge, then there is a decent probability that the batsman will be dismissed.

Batsmen are able to play more assertively when they feel comfortable that they are able to use their pad as a second line of defence without the risk of being dismissed lbw. This is why it’s important for a spin bowler to constantly attack the stumps with either the big spinning delivery, the straight ball, or both.

We therefore want to keep as many deliveries as possible ending up in the danger zone: either on the stumps for a chance of bowled or lbw or within 6 inches of off stump for a likely caught behind chance.

On a spinning pitch, then 10 degrees of turn will translate to a difference of about 15 inches between the straight ball and the big turning delivery. So we need to take this into consideration when planning our line of attack.

 If the ball is turning away from the batsman, the ideal stock line is to pitch the ball on middle and leg, with the straight delivery angled in towards leg stump. Spin the ball hard enough for the spinning delivery to hit or go past the top of off stump.

The batsman will then be forced to play down a middle stump line to defend against the spin, and this will mean that both the straight delivery and the big spinner will have a good chance of dismissing him.

The off spinner should ensure that his big spinning delivery is not wasted by constantly turning down the leg side. This means that he needs to pitch the ball just outside off stump. A sensible batsman will then play down the line of off stump to defend against the spin, leaving both the big spinner and the straight ball as wicket-taking options.