StudentShare solutions
Triangle menu

Optimal Number Of Firms In The Market - Essay Example

Nobody downloaded yet

Extract of sample
Optimal Number Of Firms In The Market

Imagine if the world is consuming what has been given to them, the world is being operated on daily basis, such as a limited amount of food is prepared daily and in order to prevent the food from getting stale, people consume every unit of it, is it possible Of course there is no chance for such situation, so we have to consider even bigger policies for production and consumption, may be we can use the past records of what is the optimal level of production and consumption or at which particular level firms are having maximum profit and minimum loss. We now have to consider the importance of the circular flow or economic cycle, the market system heavily relies on the supply and demand to solve the three major arising problems that are What goods and services will be produced, it is determined by the daily purchasing decisions of the customers as keeping it on the yearly basis can be very risky, one can see that over the past few years the bird flue took place significantly, therefore we cannot rely on yearly basis as the behavior of consumers can change unpredictably. The second problem is How things or goods produced would be rated in terms of pricing, of course there is a competition everywhere, so the problem of differentiating the product arises. Taking the example of bird flue there are many other issues that are very common in every day life such as at times there is drastic change in the technological market, such as everyday a new computer technology replaces the old one which eventually results in greater competition and brand switching. The third issue is For whome things are produced, here the focus is obviously on consumers and their level of consumption, but supply and demand has a major role to play here. The immediate task the companies have to face is to determine the wages, land rents, interest rates and many factors related to everyday life, it is explained thoroughly later in this discussion. The circular flow is all based on the previously discussed three problems. What the flow intends to show is that all the money is constantly moving within a frame of a country, there are minor changes but over all the flow is constant until and unless some big change takes place such as war. The circular flow is all comprised of four things, those are product markets (prices are set by the markets keeping in view the scenario), Household markets (the buyer behavior which keeps on shifting but over all the money utilization and spending is unchangeable), the business sector (which pays the rents and wages to the people working, who are also at the same time are households) and the factor markets (which keep on changing the rents, wages, interests but over all the wealth remains within the country, if less rent for one person may be much higher for another person). Until and unless these problems would not be solved which of course cannot be solved the firms would find it impossible to be operated at an optimal level.

"Dollar votes of households interact with business supply in the product markets at top, helping to determine what is produced. ...Show more


A position in which the aim of any economic unit is being served as effectively as it possibly can be, within the constraints applying. Where a situation is not optimal, gains in welfare can be made for some without any sacrifice by others. Essential to the meaningful application of the concept of an optimum is the existence of some objective and some constraint on the pursuit of that objective"(Bannock, Baxter, Davis 306:1998).
Author : irunolfsdottir
Optimal Number Of Firms In The Market essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Optimal Number Of Firms In The Market"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Discussion of the theories on Optimal Capital Structure
It is always expected that the capital structures vary considerably across industries. And the optimal capital structure is also different for different industries. Many researchers and practitioners have come up a number theorise and some of them are explained in the following sections.
6 pages (1500 words) Essay
Maximizing profits in market structures
The competitive market is therefore perfectly elastic (Mankiw, 2009). The product is always homogeneous in a competitive market, and producers have no control over price. There is perfect knowledge by all buyers and seller, and perfect mobility in all factors in the competitive market (Jain & Khanna, 2009).
4 pages (1000 words) Essay
Firms in Context to Liberal and Coordinated Market Economies
Different countries have implemented different setups of economies, most popular one in this regard are capitalism and socialism (Lipset, 1993). Capitalism can be further divided into various types (Fukuyama, 1992). Hall and Soskice (2001), after conducting thorough study and researches on the concept of varieties of capitalism, came up with two new typologies named liberal market economies and coordinated market economies.
8 pages (2000 words) Essay
The importance of entry and to deter entry in case of firms in different market structures
The market structure is characterized by freedom of entry and exit. Monopolistic competition along with oligopoly constitutes the structure of imperfect competition. Firms that are imperfectly competitive offer many products.
7 pages (1750 words) Essay
Optimal Capital Structure
The equity investors become part-owners and partners in the business and tend to exercise some control over how the business is run. The capital structure is signified by the firm's debt-equity ratio and gives an insight as to how risky the firm is. It gives the Weighted Average Cost of Capital (WACC).
8 pages (2000 words) Essay
Response to Wall Street Journal Article Entitled: Cash-Rich Firms Feel Pressure to Spend
The object of this paper is to answer certain questions regarding the corporate economic actions and trends set forth in Gregory Zuckerman’s article entitled, “Cash-Rich Firms Feel Pressure to Spend” as published in the 11 July 2005 issue of The Wall Street Journal.
4 pages (1000 words) Essay
Discuss the theory of Optimal Capital Structure
The equity investors become part-owners and partners in the business and tend to exercise some control over how the business is run. The capital structure is signified by
8 pages (2000 words) Essay
Should firms price discriminate
The utility and consumer surplus theorems played a vital role in our understanding of PD and importantly how it might help in achieving
6 pages (1500 words) Essay
Market in econmoy
These four different types of market have various characteristics. In perfect competition firms are the price taker and they all sell similar products. It is known as pure competition with many buyers and
6 pages (1500 words) Essay
Market Structure
Market Structure is an imperial study in Micro economics that may be defined as a collection of interdependent factors which determine the level of interaction between buyers and sellers prevailing in the market and adjust price and output level according to the interrelationship between them. In particular, market structure demonstrates the number of firms producing identical and homogeneous goods and services
14 pages (3500 words) Essay
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
Comments (0)
Click to create a comment
Contact Us