Question

Explain the difference between price-taking and price-setting firms. Give an example of your experience with each. What are characteristics of the four market structures. How a business, thinks of the margin or uses marginal analysis to operate daily, provide  gexamples of what it means to optimize and how optimization problems are prevalent in people's life).

What tools or resources I can used to develop confidence and comfort-ability with estimation, simple linear regression, and/or multiple regression?

Answer 1

•The firms in a perfect competition market are price taking firms. Because these firms can't impact the price in the market according to the quantity of its products. That is these firms have no market power. Example of a price taker is that a farmer can sell his rice in the market only at its existing price in the market.

• A price maker is firm that exists in a monopoly market. These firms can sell the product at any price. That is they can control the price of the product because these products don't have substitutes in any sense. An example of a price maker is the electricity providers of states such as KSEB.

• Perfect competition :

• ​​​​​​There are numerous number of firms.
• There are no barriers to enter and exit the market.
• There exists similar products.
• There is no control over price.

• Monopoly :

• There will be only a single firm.
• There are barriers to enter and exit the market.
• There will be unique products.
• There will be considerable control over the price.

• Monopolistic competition :

• There will be many firms.
• There will be few barriers.
• There products are different in the market.
• Firm have some control over the price.

• Oligopoly :

• There will be few firms.
• There will be many barriers.
• The products can be same or different .
• Firms have some control over the price.

• Marginal analysis examines the advantages of an action made in a business with the costs paid for that implementing that action. Companies use this concept to rise their earnings and overall profits.

• Optimization is the process of finding a suitable substitute in a cost efficient and effective manner inorder to increse the output of a business by meeting the limitations. By this process it is able to compare different options and thus able to select the right suitable option. The best can be selected based on the factors such as strength, efficiency, reliability, long life, reusability, etc.. Thus in every works, people uses the concept of optimization to get the best.

Regression equations can be used to make better predictions. Linear regression can be used to understand the behavior of consumers and the factors which are responsible to increase the earnings or profits from the product. Thus as business man, it can be used in business or companies to know the present trend in the market and thus forecast estimates regarding it.

Thanks!..