The above video presentation was made by ECON111 students (TTh/11:00am-12:30pm) of Ateneo de Davao University in completion of their MidTerm grade.
The following shows the various phenomena in the market where there is perfect competition, surplus and shortage of products and how prices adjust to reach the equilibrium.
Scene 1
Shortage
This occurs when quantity demanded exceeds the quantity supplied. It also refers to a situation where most people are unable to find a desired good at an affordable price. The affordability of a good for the majority of people is not an issue: If people wish to have a certain good but cannot afford to pay the market price. In the case of government intervention in the market, there is always a trade-off, with positive and negative effects. For example, the price of a laptop (as enacted in this video) may cause a shortage, but it will also enable a certain portion of the population to purchase the certain product and that they couldn't afford at market costs. Economic shortages are generally seen as undesirable since they lead to economic inefficiency.
Scene 2
Surplus
Occurs when the quantity supplied exceeds and the amount that consumers benefit by being able to purchase a product for a price that is less than the most that they would be willing to pay and that the producers are benefited by selling at a market price mechanism that is higher than the least that they would be willing to sell. In a perfect competition, no producer surplus increases to the individual firm and thus, this is said to be, the economic profit is driven zero.
Scene 3
Perfectly Competitive Market
Perfectly Competitive Market has no participants that are large enough to have the market power to set the price of all the same product. Perfect competition serves as a benchmark which to measure real-life and imperfectly competitive markets. A perfectly competitive market exists when every participant is a "price taker", and no participant influences the price of the product it buys or sells. And perhaps, the closest thing to a perfectly competitive market would be a large auction of identical goods with all potential buyers and sellers are present.
