Question

·PLEASE HELP EXPLAINE THE BELOW. Am busy preparing for my exams

· Economies of scale and competitive advantage

· Supply and Demand analysis

· Market structures

Answer 1

1. Two basic forms of competitive advantage are available: cost advantage and differentiation advantage. While this dual division covers most competitive advantage situations, a more in-depth analysis could be performed, breaking down the factors that allow a business to gain either a cost or a differentiation advantage.

For example, differentiation can be accomplished by innovative products, better customer service, etc. Similarly, cost leadership can be accomplished by economies of scale, strengthened vendor partnerships, and the like.

Scale economies are cost reductions that happen when firms increase production. Unlike accounting, the fixed costs are distributed over more production units. The organization can also bargain sometimes to reduce the variable costs It is also possible for governments, non-profits and even individuals to benefit from economies of scale. This occurs when an organization generates more, becomes more productive, and as a result this lowers costs. Two main types of economies of scale are present: internal and external. Since they are internal to the organization, internal economies are controllable by management. Global economies are based on global factors. These factors include business, location, or state.

2. Throughout economics, supply and demand is linked to the quantity of a commodity which manufacturers want to sell at different prices and the quantity that buyers want to purchase. It is the main model used in economic theory for price determination. A commodity's price is determined by a market's relationship between supply and demand. The resulting value is called the cost of equilibrium and is an arrangement between producers and consumers of the product. The quantity of a good supplied by producers in equilibrium is equal to the quantity that consumers require.

The combinations of price-quantity can be plotted on a curve, known as a demand curve, with the price on the vertical axis and the quantity on the horizontal axis being represented. A demand curve is almost always down-sloping, reflecting consumers ' willingness to buy more of the commodity at lower prices. Any change in non-price variables will cause the demand curve to shift, whereas shifts in commodity prices can be tracked along a fixed demand curve.

A supply curve is usually upward-sloping, reflecting the willingness of producers to sell more of the commodity they produce in a market with higher prices. Any change in non-price factors would cause the supply curve to shift, while commodity price changes can be traced along a fixed supply curve.

3. Perfect competition is a description of a market structure where a large number of small companies compete with each other. In this scenario, there is no significant market power in a single firm. As a result, the entire industry achieves the socially optimal output level, as none of the businesses can control market prices.

Monopolistic competition also refers to a structure of the market, where a large number of small companies compete with each other. Unlike perfect competition, however, the companies sell similar, but slightly differentiated goods in monopolistic competition. This gives them some degree of market power, enabling them to charge higher prices within a given range.

An oligopoly describes a structure of the market that is dominated by a small number of companies. This leads to a limited state of competition. Companies may compete or cooperate with each other (see also Cournot vs. Bertrand Competition). We can use their combined market power to drive rates up and earn more money by doing so.

A monopoly is a market structure where the entire market is controlled by a single company. The company has the highest level of market power in this scenario, as there are no alternatives for consumers. As a result, monopolies often lower output in order to raise prices and make more profit.