E-Milk Bottles

Company name: Elementary Milk Bottles (E-Milk bottles)

E-Milk bottles specializes in making milk bottles for children below 8 years old. This good is essential around every developed and developing country thus I would conclude that the market structure of my firm will fall under perfect competition. E-Milk bottles is a small firm relative to the size of the industry. It is not capable of altering its own output to have noticeable effect in the economy as a whole. E-Milk bottles cannot affect the supply curve of the industry and so cannot affect the price of product. E-Milk bottles have to sell its bottles at whatever price set by the demand and supply in the industry. E-Milk bottles can also be known as “price takers”.

E-Milk bottles cannot raise prices above the current market price as other firms will not follow and hence causing them to loose trade sales and probably profits. E-Milk bottles also cannot lower its prices below cruent market price as other firms will not follow, undercutting them, and so creating a price may cause harm to all firms.

Allocative efficiency occurs where suppliers are producing the optimal mix of good and services required by consumers, when marginal cost is equal to average revenue.

Productive efficiency is when a firm producers its product at the lowest possible unit cost. This can be done by combining all resources and making them as efficient as possible and not be wasted by inefficient use.

Since E-Milk bottles is in the perfect competition, the number of competitors she encounters is uncountable. For example, “tiger”, “kids”, “lion”, etc. All these other firms produces the exact identical goods and hence it is not possible to distinguish a good produced from one firm and a good produced from another. Furthermore, these market does not intend to make its good different from each other.

There are no barries to enter nor exit. E-Milk bottles is completely free to enter or leave the industry. However, this also mean that one cannot stop another firm from entering or leaving the industry too.

There are a few factors that E-Milk bottles may want to improvise in order to obtain a better product or a more favorable product to the public. This may be price or non-price competition which E-Milk bottles may be engaged in during the near future. Firstly, a brand name, creating and developing a brand loyalty to the public, this will eventually increase demand for that good. This can be done by packaging, special features, sales promotion and sponsorship deals.

Lastly, E-Milk bottles would not practice price discrimination to gain more revenue as she believes its unfair to some and that E-Milk bottles has to mantian her loyalty to all her customers.

Done by: Emily Yiu, Michael Chu, Mark Ho
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