Elizabeth Zarate

Econ 12

Extra Credit




            Hidden between the suburbs of New Jersey lay a quaint town called Atomistic (named after the founding family).  Due to its quite and modest background, Atomistic remained appealing to all those that came across it; it always welcomed all people to enter or leave the city, it was known for its low prices across town, and there were no large dominating firms to take over the quaint town---basically all was peaceful and controlled within the city of Atomistic.  Due to all of its appeal, many families would visit, enter and leave accordingly.  But, as many families came and went, the founding family and all its ancestors remained a constant within Atomistic.  That is, up until the birth of Mary Atomistic.

            As a little girl, everyone knew that Mary was different from the rest of the children.  While many of the children would play pretend “shopping” and sell many of the same products at a relatively low price, Mary would insist on selling various other products while setting her own price.  Growing up, she would often daydream about the world beyond the Atomistic world; she constantly speculated what was beyond her Atomistic backgrounds; she often felt she lacked power or control with many aspects of her life—she considered it to be a place full of homogenous people, companies, and products, that lacked the excitement she was readily hoping for.  Seeing the daydreams within her eyes, her parents could no longer force her to live in a place where she felt she did not belong; they understood that she would not appreciate her Atomistic roots until she experienced the rest of the world.  With that, Mary was allowed to travel the world and seek the life she dreamed about.  

            After years of traveling, she finally settled to a town called Absolute.  She quickly realized that it was very different from that of her birthplace Atomistic.  In Absolute, many families did not come and go (apparently it was not appealing enough for visitors to enter) and the town consisted of many monopolies.  Despite that there was more competition and higher costs, she began realizing that she missed her home. She finally understood the “perfect” lifestyle and market Atomistic city offered.   While Absolute was not what she expected, the trip proved to be beneficial after all, for she met her fiancé-Milton Absolute.  She recognized that it was time to go home to Atomistic, but this time she was bringing back a fiancé. 

            Arriving in Atomistic, she began recalling old memories of the town’s uniqueness, in the sense that things were open, calm, relaxing, and less competitive.  Her fiancé was in awe of the lack of variety within the town and companies-yet he knew he would learn to love it with enough time for adjustment.

            As years passed by, and the adjustment period for Milton had long passed, they decided to form a partnership.  They wanted to sell a product in which their town people would be familiar with; therefore they entered the homogenous market of growing and selling strawberries.  Considering that Atomistic City was well known for their strawberries, it was normal for new comers to enter and leave the market.   In the initial stage of their business they learned many new concepts about running a business within Atomistic.  They learned that because many firms and families were selling the same product at the same location, no one had pricing power and that price was based on demand.  So they mainly focused on selling to people in the spring when most people demanded strawberries.  They also learned that in order to be the most efficient, their average cost curve should be tangent to that of the price curve.  

As the new couple acquired all this new information, they set their business to the rules accordingly.  Yet, after years (the long-run) of corresponding to the rules of Atomistic, they had realized that they had made zero-economic profit.  Comprehending this news, the couple became distraught at their supposed failing of their business and went to shut their business down.  But on their dreary walk to their store, a young economist walked by and asked the reason for their frowning expressions.  As the couple expressed their sadness about their business, the economist began to smile with each word they spoke.  Seeing his contentment, the couple could not help but ask, “why are you laughing at our misfortune?” He then began to explain his theory: “although it may seem that you have zero-economic profit, your business is still making an accounting profit-it is all part of the long-run equilibrium, don’t worry-there is no need for you to shut down your business.”  Hearing this news, the couple became overjoyed at the salvation of their business.  They ran around Atomistic claiming its perfection and the continuation of their business.  All the other businesses were truly happy for the couple for they knew that their business would not hurt theirs-for in Atomistic, there is complete absence of pricing power and there is no firm that solely dominates the market.   Delighted about their business, the couple hosted a party in which all of their close friends and family gathered.  They announced that they now truly believed that “Atomistic is perfect---perfect competition.”  Mary and Milton lived happily ever after in perfect competition.