You are reading about which of these best enables a firm to establish its profit-maximizing quantity of output?. Here are the best content from the team C0 thuy son tnhp synthesized and compiled from many sources, see more in the category How To.
Microeconomics- Everything You Need to Know
Microeconomics- Everything You Need to Know
Microeconomics- Everything You Need to Know
Demand and Supply [1]
In our introductory lecture on Structural Adjustment we discussed various policies that countries are adopting all around the word to promote economic growth (increasing output rather than increasing their ability) and achieve productive and allocative efficiency. It is hoped that as economies move away from command economies (Chapter 23) toward mzrket economies or capitalism (chapter 4).
We will study supply and demand in this “Macroeconomics of the Gloabal Econaomy” course to better understand why there is a worldwide movement to remove price controls and let Supply and Demand determine prices.. By doing this they help the economy maintain allocative efficiency and productive efficiency.
When the price increased two things happened: (1) plywood was rationed to its most important uses (not doghouses or decks), and (2) the high prices were an incentive for more plywood to be guided to Florida so that they had more plywood. If the price of plywood was kept too low the result was allocative inefficiency (a shortage).
Profit Maximization in a Perfectly Competitive Market [2]
– Determine profits and costs by comparing total revenue and total cost. – Use marginal revenue and marginal costs to find the level of output that will maximize the firm’s profits
A perfectly competitive firm has only one major decision to make—namely, what quantity to produce. To understand why this is so, consider the basic definition of profit:
Rather, the perfectly competitive firm can choose to sell any quantity of output at exactly the same price. This implies that the firm faces a perfectly elastic demand curve for its product: buyers are willing to buy any number of units of output from the firm at the market price
Economies of Scale [3]
Economies of scale refer to the cost advantage experienced by a firm when it increases its level of output. The advantage arises due to the inverse relationship between the per-unit fixed cost and the quantity produced
Economies of scale also result in a fall in average variable costs (average non-fixed costs) with an increase in output. This is brought about by operational efficiencies and synergies as a result of an increase in the scale of production.
In this case, production refers to the economic concept of production and involves all activities related to the commodity, not involving the final buyer.. Thus, a business can decide to implement economies of scale in its marketing division by hiring a large number of marketing professionals
Minimizing Costs – Intermediate Microeconomics [4]
Will an Increase in the Minimum Wage Decrease Employment?. Recently, a much-discussed policy topic in the United States is the idea of increasing minimum wages as a response to poverty and growing income inequality
In this chapter, we will study how firms decide how much of each input to employ in their production of a good or service. This knowledge will allow us to address the question of whether firms are likely to reduce the amount of labor they employ if the minimum wage is increased.
These inputs are costly, so firms must be smart about how they use labor, capital, and other inputs to achieve a certain level of output. The goal of any profit maximizing firm is to produce any level of output at the minimum cost
Producer Theory: Costs [5]
The basic theory of the firm regards the firm as a mechanism for transforming productive inputs into final and intermediate goods and services. For instance, the smelting of copper or gold removes impurities and makes the resulting product into a more valuable substance
Cooking transforms raw ingredients into food, by adding flavor and killing bacteria. Moving materials to locations where they have higher value is a form of production
According to this simple view, a firm is comprised of a technology or set of technologies for transforming materials into valuable goods and to maximize profits. This “production function” view of the firm is appropriate for some environments, when products and services are standardized and technologies are widely available
2.3: Profit Maximization for a Price Taking Firm [6]
Supply reflects profit maximizing behavior of firms in the market. The assumption is that firms are in business to make a profit
To keep things simple, assume that the market consists of price-taking firms. The price-taking assumption means that any given firm can produce and sell all that it wants at the going market price
– The firm is small relative to the size of the market. The firm must be sufficiently small that its output decisions have a negligible impact on market price
Wikipedia [7]
This article needs additional citations for verification. A monopoly (from Greek μόνος, mónos, ‘single, alone’ and πωλεῖν, pōleîn, ‘to sell’), as described by Irving Fisher, is a market with the “absence of competition”, creating a situation where a specific person or enterprise is the only supplier of a particular thing
In law, a monopoly is a business entity that has significant market power, that is, the power to charge overly high prices, which is associated with a decrease in social surplus.[3] Although monopolies may be big businesses, size is not a characteristic of a monopoly. A small business may still have the power to raise prices in a small industry (or market).[3]
Likewise, a monopoly should be distinguished from a cartel (a form of oligopoly), in which several providers act together to coordinate services, prices or sale of goods. Monopolies, monopsonies and oligopolies are all situations in which one or a few entities have market power and therefore interact with their customers (monopoly or oligopoly), or suppliers (monopsony) in ways that distort the market.[citation needed]
Business Objectives [8]
A business has a variety of potential objectives from profit maximisation to cultivating good relationships with various business stakeholders. Economic theory often assumes that firms are rational profit maximisers
The most basic model of a firm assumes firms wish to maximise their profit. They will do this by increasing revenue (price * quantity sold) and reducing costs
Many other objectives such as corporate image an increasing market share can be a way to maximise long-term profit.. An alternative to profit maximisation is for a firm to try and increase market share and increase the size of the firm
8. Supply and demand: Price-taking and competitive markets [9]
Unit 8 Supply and demand: Price-taking and competitive markets. How markets operate when all buyers and sellers are price-takers
– The interaction of supply and demand determines a market equilibrium in which both buyers and sellers are price-takers, called a competitive equilibrium.. – Prices and quantities in competitive equilibrium change in response to supply and demand shocks.
– The model of perfect competition describes idealized conditions under which all buyers and sellers are price-takers.. – Real-world markets are typically not perfectly competitive, but some policy problems can be analysed using this demand and supply model.
ECON 150: Microeconomics [10]
We now turn our attention to the demand and supply of resources also called inputs or factors.. Resources are used in the production of goods and services
Consumers do not directly value steel, in and of itself, but since we demand cars, we indirectly demand steel. If the demand for cars increases, there would be an increase in the demand for the steel that is used to make cars.
Understanding these concepts enable us to determine how much a firm would be willing to pay for steel on the margin or if it is worth paying someone $20 per hour. These answers depend on the value or revenue generated by using an additional amount of the input in question (i.e
Competition And Monopoly: Single-Firm Conduct Under Section 2 Of The Sherman Act : Chapter 2 [11]
Update: Justice Department Withdraws Report on Antitrust Monopoly Law (05/11/2009). Monopoly power can harm society by making output lower, prices higher, and innovation less than would be the case in a competitive market.(1) The possession of monopoly power is an element of the monopolization offense,(2) and the dangerous probability of obtaining monopoly power is an element of the attempted monopolization offense.(3) As discussed in chapter 1, the mere possession of monopoly power does not violate section 2.(4)
It significantly reduces the possibility of discouraging “the competitive enthusiasm that the antitrust laws seek to promote,”(5) assures the vast majority of competitors that their unilateral actions do not violate section 2, and reduces enforcement costs by keeping many meritless cases out of court and allowing others to be resolved without a trial. Accordingly, it is important to determine when monopoly power exists within the meaning of section 2.
Drawing on lessons from the hearings, along with existing jurisprudence and economic learning, this chapter discusses the Department’s view on appropriate assessment of monopoly power in enforcing section 2.. Market power is a seller’s ability to exercise some control over the price it charges
Sources
- http://www2.harpercollege.edu/mhealy/eco212i/lectures/s&d/s&d.htm#:~:text=If%20the%20price%20of%20a%20resource%20used%20to%20produce%20the,to%20the%20left%20(%20S).
- https://courses.lumenlearning.com/wm-microeconomics/chapter/profit-maximization-in-a-perfectly-competitive-market/
- https://corporatefinanceinstitute.com/resources/economics/economies-of-scale/
- https://open.oregonstate.education/intermediatemicroeconomics/chapter/module-7/
- https://saylordotorg.github.io/text_introduction-to-economic-analysis/s10-producer-theory-costs.html
- https://socialsci.libretexts.org/Bookshelves/Economics/An_Interactive_Text_for_Food_and_Agricultural_Marketing_(Thomsen)/02%3A_Market_Supply/2.03%3A_Section_3-
- https://en.wikipedia.org/wiki/Monopoly
- https://www.economicshelp.org/blog/2250/uncategorized/business-objectives/
- https://www.core-econ.org/the-economy/book/text/08.html
- https://courses.byui.edu/econ_150/econ_150_old_site/lesson_10.htm
- https://www.justice.gov/archives/atr/competition-and-monopoly-single-firm-conduct-under-section-2-sherman-act-chapter-2
