Microeconomics Essay Example | Topics and Well Written Essays - 750 words - 1

Microeconomics - Essay ExampleAnother major barrier blocking a sign of the zodiacs entry into a new grocery storeplace is the raising of sufficient capital to buy required products or technology. While this barrier is clearly industry specific, it can surface in terms of financing to buy the business itself, or in start-up salutes that are necessary to purchase machines, technology, or patents that go forth permit full organizational operation. Another barrier is the nature of predatory pricing. This functions when the established firm is suit adequate to sell products for prices wherein they take a loss for a period of time as a convey of putting the competing firm out of business. Another major barrier for entry in a market is the nature of exclusive relationships with suppliers. In these instance, the established firm is able to sign deals wherein the supplier is only able to sell products to the established firm in-effect making it impossible for new firms to enter the m arket 2. The demand slide for a purely monopolistic firm differs from the demand curve for competitive firm in hearty ways (Krugman 2005). One of the important concepts to recognize in these regards is the nature of market indicant. Market power is mum as the ability of a business or firm to raise prices above the marginal cost level and still retain customers. In firms experiencing a purely competitive market environment, the market power is non-existent. In these situations, then, the demand curve for purely competitive firms is a horizontal line. This reflects the nature of market prices as static due to market conditions of pure emulation that ensure the market prices dont compound about the level of marginal costs. Conversely, the demand curve for a firm in a market experiencing pure monopoly is entirely different. In a purely monopolistic market the firm experiences no competition from outside firms. In these regards, the nature of the market is not based on supply and d emand, but is effected by the monopoly itself. In these situations, the firm has close to complete power yet, the firm is still bounded by the price consumers are willing to pay for the product. In pure monopolistic situations, the demand curve is the detailed equivalent of the price the firm establishes. This is because consumer demand will decrease with the increased price, yet it is entirely resolute by this element, as there are no outside competitive factors. 3. When considering the nature of productive efficiencies and allocative efficiencies, its clear that there are a number of notable dissimilitudes (Productive vs Allocative Efficiency). In firms or markets that promote productive efficiency measures, the major goal is to produce goods or services for the lowest cost that is possible. In achieving optimal productive efficiency the firm is implementing all of its inputs and workforce to ultimate efficiency measures as a means of driving down product prices to the lowest possible level. Productive efficiency is separate from allocative efficiency. Allocative efficiency is concerned with the allocation of resources throughout society. Allocative efficiency recognizes that not all goods that are produced can be utilized by society, so that in overproducing goods can negatively affect efficiency levels. The primary difference between these types of efficiency then is the nature of the end goal with