profit loss is in effect with the
firms long-run Average Total Cost
then the firm will have to cut
their losses and exit the market.
One reason why most firms did
better than others is because of
their Average Total Cost being
lower than the price... Showed first 250 characters
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They will be
able to make the profit that is
needed for the firm to survive.
Another reason is because the firm
has a strong marketing strategy.
Marketing involves the gathering of
useful data: what the consumer
wants. When the data gathered and
studied the information provided
will let the firm know what goods
to produce or what type of
advertising to use... Showed next 250 characters
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Market Structure Maximize Profits
The goal of a firm is to maximize profits, to get as much for the firm as possible. In the perfect competition, each firm maximizes profits where marginal revenue (MR) equals marginal cost (MC)...
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Now let's take for example say 20 firms with a concentration ratio of 30%, this means this is more of a free market. Since only 30% is held by the four-firm concentration ratio there is more space for the "little guys" to make money...
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Markets And Market Structures
• Perfect competition
- All Firms sell an identical product
- All firms are price takers
- All firms have a relatively small market share
- Buyers know the nature of the product being sold and the prices charged by each firm...
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perfectly competitive market
A market which converges all of below assumptions is called perfectly competitive market:
''Assumption 1. All the firms in the industry sell an identical or homogeneouse product...
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Wal-Mart in the Oligopolistic Market
1. Fewer Sellers: A few firms are so large relative to the total market that they can affect the market price. This results in Mutual Interdependence where an action by one firm may cause a reaction on the part of other firms...
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No single firm can influence market price in a competitive industry; therefore a firm's demand curve is perfectly elastic and price equals marginal revenue...
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Is it the case the firms must maximise profits in order to survive?
Maximising profits, which would generate wealth for the owners, increase firms’ market value and guarantee consistency in employment for the workforce, is indeed a positive practice to pursue, however is it also an unconditionally vital one? In order to understand this issue we must first consider the basic matter of the discussion: what is profit and how can it be maximised...