Day One: Perfect Competition
On the first day of the week, I went to the supermarket which is located close to my residence and I wanted to buy a packet of milk and some groceries. However, I decided to compare the prices of these two commodities between two supermarkets that are located adjacent to one another.
I noticed that the price of milk was exactly the same in the two supermarkets, while that of groceries had a very small almost negligible difference between them. This is an example of a perfect competition whereby suppliers can only price their commodities at the same exact price since any adjustment is likely to result in the loss of their customer to their immediate competitors (CFA, 2010).
Day Two: Elasticity of Demand
On the second day, as I purchased the groceries at my preferred supermarket, I noticed that the prices on some of the fruits and vegetables had been reduced by as much as 50% off the normal price. Instinctively, I decided to buy as many of these cheap vegetables as possible due to the cheap price so that I could stock up before prices returned to the normal range. This is an example of a Perfectly Elastic Demand whereby a small change in the price of the commodity results in a large change in the quantity demanded of the same commodity by the buyers (CFA, 2010)
Day Three: Oligopoly
On the third day, I decided to fuel my vehicle as it was running low on gas. On reaching the gas station, I noticed at the price of my fuel had doubled overnight and I did not have enough money to fill my tank due to the price increase. As a result, I decided to drive to the next fuel station which was owned by a different company with the hope of getting cheaper fuel. On reaching there, I noticed that they had also doubled the price of their fuel. This is an example of an oligopoly where a few players in the market determine the price of their commodity by mutually agreeing to set its price at their preferred level (CFA, 2010).
Day 4: Substitute Goods
On the fourth day, I returned to the supermarket to buy my favorite packet of gourmet coffee. However, on reaching the supermarket shelve, I noticed that my favorite brand of coffee had significantly increased in price overnight and I did not have enough money to buy it. However, I also noticed that other coffee brands had maintained their normal prices. Therefore, I happily bought an alternative brand of coffee and took it home with me. This is an example of the concept of closeness of substitute goods that primarily affect the elasticity of demand of a product (CFA, 2010).
Day 5: Monopoly
On the fifth day, I woke up in the morning with a foul mood because I had not had electricity power in my house from my utility provider for the last three days in a row. I had made numerous complaints but none of the staff members had come to my rescue. Instinctively, I deiced to find another power utility company who would provide me with electricity power going forward.
References
CFA Institute. (2010). Economics. New York: Pearson Custom Publishing
