The imposition of a one unit sales tax on the output of a monopolist will result in increasing the overall prices of the product as the monopolist will directly increase the price in order to overcome the increase in the cost due to the imposition of the one unit sales. This can…
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In order to find the marginal cost we will calculate the first derivative of total cost function:
Monopoly is a market structure where there is a single producer or seller of the product in the market with no substitutes available. This means that the ultimate power lies with the producer or seller and not with the consumer. In other market structures, the authority to choose a product is in the hands of the consumer but in a monopolistic market there are no substitutes available and the consumer has to accept what is being offered to them.
Monopoly is considered inefficient due to the fact that the market doesn’t have any substitute of the product giving the producer or seller an authority to set prices according to their need. They usually discriminate regarding the prices and charge higher than the marginal cost of production in the market. Such market doesn’t focus on the consumers as they are aware that no matter what ultimately the consumers will choose their product even if the quality of the product is below the standards. In such market structure, the barriers to entry are high giving no or little entry positions to other businesses. As a result of the barriers there is no competition or rivalry in such market.
This market is considered inefficient than the other market structures because this market produces less output as compared to others. With no competition, reduction in the output level leads to high prices. It also creates inequality because it converts the consumer surplus into producer surplus. This inequality between the price charged and the marginal cost makes this market inefficient. This means that there is price discrimination in such market and some consumers have to pay higher prices.
In monopoly the output level is less and creates unemployment of the resources. The resources are not properly and efficiently utilized as compared to other market structures. In such market the price is greater than the marginal
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(“Economics for business Essay Example | Topics and Well Written Essays - 2000 words - 1”, n.d.)
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(Economics for Business Essay Example | Topics and Well Written Essays - 2000 Words - 1)
“Economics for Business Essay Example | Topics and Well Written Essays - 2000 Words - 1”, n.d. https://studentshare.org/macro-microeconomics/1608166-economics-for-business.
The owners of factors of production get wages, interests, rents and profit. The role of the government in the system is to ensure the welfare of the society is not compromised. The free market is characterized by competition by various players’ hence free allocation of resources.
The price acts as a signal to buyers and producers and acts as an incentive to buy or sell. For example, in fig. 1, when the price is high (P1) sellers get more profit hence increase supply but buyers opt not to buy as they don’t get value for money. There is thus surplus in the market which forces sellers to accept lower prices until equilibrium is reached at P.
(Investopedia, 2011). It is a natural force that comes into effect in free market through improving efficiency. Resource allocation refers to the process of distributing resources in an economy. There are a number of ways in which an economy can allocate resources amongst itself.
Introduction The very recent outburst of the housing price bubble in the most advanced and developed economies of the world has raised in serious concerns about the management of the macroeconomic tools, measures to combat the inflationary pressures especially by the public authorities, as that led to a financial crisis, and the consequences of the financial crisis had to be faced by the global financial economy.
In November, 2010, the Chinese Government imposed a ban on the import of Australian rock lobsters into the Chinese market. However, at the same time, China continued to import lobster from New Zealand and South Africa. The Chinese Government’s decision baffled the authorities of the Australian fishing community.
Figure 3.4 reflects on a change of price leads to a change of the demand of quantity of the product. In demand curve, every point specifies the consumer benefit with each unit of additional good being consumed and by adding all the good consumed total benefit can be attained (GILLESPIE, 2011).
Besides, the economic hardships that occurred in the world during the years 2009 and 2012 are leading factors that have contributed to the tin’s price volatility. These hardships prompted poor business performance as well as low household confidence; hence damage reducing the demand for products that are made from tin, such as solder and electrical items.
what is the Business Cycle Parkin and Bade's text "Economics" gives the following definition: The business cycle is the periodic but irregular up-and-down movements in economic activity, measured by fluctuations in real GDP and other macroeconomic variables.
Because they have lost sky one, sky travel, sky news and sky sports news, though some will not get affected like the ones who free view viewers. A key determinant of the likely effect of loss of the channels is whether the services are inferior services, giffen services or veblen services.
These laws and concepts which can be used to look at the internal operations of the firm are contained in a field called microeconomics. Meanwhile, the dependency of businesses in the overall business climate is the topic of a more integrative field called macroeconomics.
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