Economics and Market Competition Companies Influence and Essay

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Economics and Market Competition

Companies influence and are influenced by market conditions. The competitiveness on the market, the supply and demand determine how companies develop their strategies. There are also other factors that determine their strategy, like market price, average revenue, and marginal revenue. The evolution of these factors and their influence on the market determine companies' behavior.

Market Price, Average Revenue, and Marginal Revenue

The market price is determined by supply and demand. When the supply of a certain product is high, its price is lower, and when the supply is low, this increases the product's price. In markets with high levels of supply there is usually intensified competition.

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When the demand for a certain product is high, the price tends to increase. In markets with reduced demand, the prices are lower, and the level of competition is reduced.

Marginal revenue is represented by the extra revenue gained when a perfectly competitive company sells one more unit of output. This is an important factor that is analyzed in relationship with marginal cost in situations where perfectly competitive companies make decisions about increasing their profits (Hubbard & O'Brien, 2009). Companies' market control abilities are reflected by the marginal revenue. If marginal revenue is constant, it means the company can control the market in case. The profits can….....

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