Market Demand and Government Intervention - Essay Example

The equilibrium quantity is determined by the output amount a firm decides to supply. For instance, Samsung and Nokia companies are all phone companies, and their demand in the market is determined by equilibrium where the price is given in the market and not by demand or supply forces.

Module 2

Government intervention has a strong influence on a willing latecomer to join the market industry. Government interventions may allow latecomers to challenge those who entered first in the market. If they do so, there is a shift of extra returns by government intervention in a particular firm from another state to the national economy. For instance, a real-life situation is whereby if China can be allowed to supply phones to America, there will be a reduction in returns received by phone-making companies in America as they will not enjoy all the profits as before.

Module 3

Financial ratios are designed with the aim of determining the weaknesses and strengths of a firm. Investors need financial analysis to know the riskiness of cash flows and future cash flows of a firm. An individual can know a company’s strengths or weaknesses by analyzing the past performance of the firm and mapping it to plans. The analysis is mainly done by analyzing financial statements. For instance, in debt ratio, the greater the ratio, the lower the protection that can be afforded by creditors upon liquidation (Hacker, 2012)