Isabella S.

Hidrosollo 2nd Year BSBA Marketing MTh 1:00 – 2:30

Abigail Neri

A perfect competition market structure is a market structure wherein all firms sell an
identical product. These firms as well are price-takers which mean they cannot influence the
market price of their product. On the other hand, the buyers have complete information regarding
the product being sold and the prices being charged by each seller/firm.

The good we have chosen for testing this theory is the banana. We went to supermarkets
inside malls and as well as the traditional wet markets in the city. The table below shows the
different sellers/firms that we went to and the corresponding selling price of their banana.

Seller/Firm Price per kg

Robinsons Supermarket, Robinsons Place Iloilo P 85.00
Super Public Market (Iloilo Terminal Market) P 55.00
Iloilo Supermart, Marymart P 67. 00
SM Supermarket, SM Delgado P 85.00
Iloilo Supermart, Atrium Mall P 65. 00

The prices between sellers are different. One reason behind is that these firms do not have
the same supplier. They get their supply from different sources and these sources sell their
produce at varying prices as well. Another reason could be the branding of the firm. Bananas in
the wet market are far cheaper than the ones in malls because they don’t establish a brand. They
just sell what they need to sell to make a living. Supermarkets in malls create a branding for their
products that makes buyers think that even though their prices are expensive, the quality is still
high. SM and Robinsons have the highest selling price because they have already established a
branding for their consumers. Lastly, firms are the ones the set the prices for the goods since
there is no mandate that all of them should have the same prices and there is only the “suggested
retail price” set by the government.

Shift in the Demand Curve

One of the locations for our observation for the prices of Lakatan Bananas is in the Iloilo
Terminal Market, commonly known as Super Public Market and the biggest public market in
Iloilo City. Upon observing, we have deduced four factors that would cause shift to the demand
curve for the Lakatan Bananas.

Prices of Related Goods

Bananas have many varieties and Lakatan bananas are considered to be more
expensive than other bananas. With this sense, people would most likely choose a
substitute for Lakatan Bananas whenever there would be a huge price increase in this
good. A shift to the left in the demand curve will happen.
Illustration of the Demand Curve as it shifts to the left due to prices of substitute goods

Income

Most people who opt to buy bananas in a wet market are those who belong
in the lower-class and middle-class family. Bananas can be classified as a normal
good for which as the income increases, there would also be an increase in the
demand, ceteris paribus. With the recent salary increases in the Philippines, a shift
to the right in the demand curve is happening.

Taste and preferences

It is a subjective factor because it is based on how much a consumer likes

the product. If there are a lot of people who like to consume Lakatan banana, then
the demand for it would shift to the right. The challenge for a seller is on how
would they be able to persuade or influence the decision of a consumer to
purchase their product.

Population

When a society has a large population, this can also affect the shift in the
demand curve of a certain good. In this case, Iloilo city has a big population and
so with this, there can be more people willing to buy bananas. This will lead to the
demand curve shifting to the right.
Illustration of the Demand Curve as it shifts to the right due to income, taste and preferences, and population