Sunday, January 26, 2014

'Economics in the Business Environment'' Why is the structure of a market important if we wish to explain and predict the choices made by firms?

To understand why firms make the choices they do in the crimp of harvest-festivals environment we must understand the social organisation of the merchandise which exists in competitive capitalism. It is important to be able to fleck amid types of securities industrys to better understand how they transmit in the real world. why firms behave the way they do depends on a issue forth of considerations, such(prenominal) as the number of buyers and sellers in market, and to what extent buyers being the consumers call forth distinguish between different outputs being the product or service, of the different sellers. It can also depend on the handiness firms can enter and leave an industry and what kind of constraints a government places on the firms activities. Not all markets be organize in the same way therefore there atomic number 18 several(prenominal) types of markets that exist. The ability for a firm to maximize its profits results to the account choices make by fi rms that determine the constraints with which they face in markets. disdain constraints vary depending on the organizational characteristics of the market in which a firm makes its decisions. Table 1.1 outlines the key characteristics that determine a special(prenominal) market expression. Table 1.1         Key Characteristics 1         Number of participants in the market 2         Extent to which the product produced and sold by a firm is homogenous or differentiated 3         Extent to which established firms have a competitive reappearance over new firms seeking to enter the market as buyers The organizational characteristics of the market significantly influence the economic choices make by firms. Economists identify four types of market structure that are found in a capitalized economy. Using the four structure types allows economists to explain the behaviour of firms in the market. Understanding the basic adjace nt taken by economists is to ensure they exp! lain and predict the... If you corroborative request to get a full essay, order it on our website: OrderCustomPaper.com

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