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Varying Costs from Firm-to-Firm

1. How do costs vary from firm-to-firm? What real-world examples do you have of how costs vary from firm-to-firm?

2. What is the difference between a normal profit and an economic profit? According to the economic model of pure/perfect competition, economic profits are not possible in the long run. Why not?

3. What other examples do you have of how suppliers can segregate the market based on the price elasticity of demand? Why would consumers need to have different elasticity's of demand for market segregation and price discrimination to occur?

4. "Countries that trade with the United States where the product sells for less; usually. This happens because there are more substitutes for the product making it an elastic demand."

Differentiate among the pure competition, monopolistic competition, oligopoly, and monopoly market models in a global environment.

In addition, price discrimination is related to market structure, as the three conditions necessary for price discrimination are:

â?¢ Monopoly power (control over price and quantity).
â?¢ Market segregation, which " . . . is usually based on [consumers having] different elasticityâ??s of demand . . ."
â?¢ No resale. (McConnell & Brue, 2005, p. 452)

Do you agree with above contentions? Is price discrimination more likely to occur within domestic markets or within international markets? Why or why not?

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1. How do costs vary from firm-to-firm? What real-world examples do you have of how costs vary from firm-to-firm?

Costs very immensely from firm to firm. For example, three different sized businesses exist. They are small, medium and large. Usually the large are MNEs (multinational enterprises) because they are a global company in more than one country with an extensive supplier chain and a means in which to have more than on e product or service line. This gives them an advantage in the market due to having estabilished customers; whereas, other companies are around for a shorter amount of time, yet have less people in which to reach on a regular basis. Regardless, one can demonstrate that each organization has a different means in which to have customer loyalty, and each one will attract certain individuals based off what it is they are trying to sell to the consumers at that time. In the end, people will make different amounts based off products and services provided to a specific location and marketing efforts.

2. What is the difference between a normal profit and an economic profit? According to the economic model of pure/perfect competition, economic profits are not possible in the long run. Why not?

A normal profit is what is made on a regular basis within a firm, such as sales from groceries. In regards to .economic profit, this is in regards to how they are making money in regards to their entire industry. As one can tell, a person is able to make profit both microeconomicallly and macroeconomically. Economic ...

Solution Summary

This solution discussed economics.

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