Question

a) Two techniques to estimate firm's economic of scales.
b) Elaborate two factors that change the industry's degree of concentration.
c) How the degree of concentration influences the market performances of the industry?

Answer 1

a) Sale forecasting techniques are of two types, quantitative and qualitative. Quantitative technique imply mathematical and objective analysis of the factors which predicts sales, it is more calculative and descriptive in nature Whereas, qualitative method is subjective, where the opinions of experts and their view points are given more importance while estimating the economic future sales of the firm.
b) The concentration of the firm or industry means the degree at which smaller number of firms make for total production in the market. If it is low, then the top number of firms do not influence the market production and high competition is created in the industry.
High number of competitors of same size and power will result in more intense competition and rivalry. The competition in the market, and the rivalry in it creates concentration of the industry.
c) The degree of concentration of an industry in the market leads to higher prices. As the prices increases and the competition also tends to increase, the performance of the industry in the market comparatively gets better. With increasing competition in the market every firm will try to enhance its performance as to earn more profits