Optimal Number Of Firms In The Market Essay Example | Topics and Well Written Essays - 1500 words

Optimal Number Of Firms In The Market - Essay faceImagine 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 diet is prepargond 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 outlook for such situation, so we have to consider even bigger policies for production and consumption, may be we set up use the past records of what is the best direct 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 feed or economic cycle, the market system heavily relies on the supply and demand to solve the three study 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 perk up that over the past few years the bird flue took place significantly, therefore we can non 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 leafy vegetable in every day life such as at times there is drastic change in the technological market, such as everyday a new computer engineering replaces the old one which eventu exclusivelyy 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 judge and many factors related to everyday life, it is expla ined thoroughly later in this discussion. The circular shine is all establish on the previously discussed three problems. What the flow intends to show is that all the money is constantly moving in spite of appearance 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), class markets (the buyer behavior which keeps on shifting but over all the money utilization and spend 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 at bottom 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.