College of St Joseph Micro Economics Essay

DescriptionRead 1 & 2 the fill out the Aspect form by order.
1. After reading chapters 8 and 9 of the book “Principles of
Economics”. I understand that in the contemporary economy,
companies must be able to produce goods and services efficiently
while minimizing costs. More efficient businesses are worth more
on the stock market and have a higher chance of success than
their less efficient rivals. Manager pay is frequently correlated with
profitability, which in turn depends on cutting costs and maximizing
output.
Economic efficiency considers which technologically efficient
process best meets the profit goal of the entrepreneur, whereas
technological efficiency relates to the link between output and
inputs used in the manufacturing process. A production system
that is economically effective generates output at the lowest
possible cost.
Not just in manufacturing, but in many other industries, production
efficiency is crucial. For instance, farmers must decide on the best
mix of labour, money, and fertilizer to utilize. Efficient supply
requires decisions about how many high- and low-skill workers to
hire, how much traditional physical capital to use, and how much
information technology to use in the health and education sectors.
Professors and doctors are expensive inputs, but when they use
modern technology, they accomplish their duties more effectively.
The short run is a time in terms of production process flexibility
during which some inputs (usually labour) are fixed, and others
(such as raw materials and energy) are changeable. Long-term, all
inputs, including capital, are erratic. Entrepreneurs and managers
will eventually have more freedom to alter the industrial process’s
technology. In each of these phases, the capital choice variable is
essential.
For instance, over the past 20 years, robot utilization has increased
in auto assembly plants because of the technology’s increased
economic viability. It is not economically feasible to use capitalintensive production procedures for clothing manufacturing,
especially when labour costs in Asia are low and outfits can be
brought back to Canada affordably, even though engineers could
create robots that can sew the fabric components that make up
garments.
For any budget-driven organization, whether in the public or private
sector, efficient production and cost minimization are crucial
factors.
The marginal cost curve meets the average variable cost curve at
its lowest point in the short term, according to the relationship
between the average variable cost (AVC) and the marginal cost
(MC). This happens because when the marginal output of labour
rises, the average variable cost first falls, but subsequently rises as
the law of diminishing returns takes hold. The average variable
cost drops when the marginal cost is lower than the average
variable cost, and it increases when the marginal cost is higher
than the average variable cost. Because of this, the marginal cost
and average variable cost are equal at the minimum point of the
average variable cost curve.
Economies of scale describe the phenomena where, over time, the
average cost of production decreases as the production scale
rises. The occurrence of economies of scale can be attributed to
several factors. One reason is that when more is produced, the
production flow may be set up more effectively. Another motivation
is the chance to leverage task specialization more effectively, like
in the case of segmenting work inside the laminating and
packaging stations. The economic efficiency of replacing labour
with capital may increase with a bigger operating scale. A larger
facility designed to create a higher production level should have an
average total cost curve that is “lower” than the cost curve
corresponding to the smaller scale of operation if scale economies
define the real world.
A market structure known as perfect competition is characterized
by a sizable number of small businesses providing the same or a
similar product, in which no one firm has control over the market
pricing. The companies are price-takers and lack the market power
to control the product’s pricing. The market has the following
essential characteristics: many businesses, standardized goods,
complete information, numerous consumers, and free admission
and exit for businesses. In a market with perfect competition,
businesses strive to maximize profit by generating output at the
point when marginal cost and marginal income are equal. Each
company has a fixed plant size and a predetermined number of
competitors in the short term. In the long run, businesses might
enter or leave the industry, and each business can alter its
operational scale.
The dynamics of market entry and exit in response to variations in
profitability are covered in this paragraph. Average profits, which
are the opportunity cost of the resources employed in production,
are what businesses aim for. Economic profits, or supernormal
profits, draw new participants to the market, which causes the
supply curve to shift outward. On the other hand, long-term losses
cause enterprises to leave the market, which shrinks the supply
curve and raises prices until normal profits are again made. The
market price must equal the least point on a firm’s ATC curve for
there to be no incentive for firms to enter or leave. This is the longrun industry equilibrium.
The idea of industries with rising and falling costs is examined; certain
industries see rising costs along with rising output, while others see
falling costs. The outsourcing of jobs to nations with cheaper wages and
the communications revolution have both had a substantial impact on
the cost structure of businesses. The minimum effective scale has also
increased across many industries because of globalization and
technological advancement. As a result, numerous industries have been
eliminated in developed nations, necessitating the retraining or
relocation of displaced workers. Despite this, economists favour
competitive markets because they result in effective resource allocation,
which uses resources only until supply and demand prices are equal.
Monopoly markets, however, do not lead to an effective distribution of
resources.
Aspect 1
Have they read the right chapter(s) for this workshop?
Grade for Aspect 1
Comment for Aspect 1
Aspect 2
Content:
• Clear topic sentence.
• The main points are covered.
• Demonstrates clear understanding of information in the text.
Grade for Aspect 2
Comment for Aspect 2
Aspect 3
Cohesiveness:
• Clear relationships between ideas.
• Connectors have been used correctly.
• The summary is organized properly and ideas are easy to follow.
• Ties together information from different sections.
Grade for Aspect 3
Comment for Aspect 3
Aspect 4
Paraphrasing:
• No text similarity and direct copying from the textbook.
• The summary communicates the same meaning.
Grade for Aspect 4
Comment for Aspect 4
Aspect 5
Grammar and vocabulary:
• Sentences are correct and well-structured.
• Punctuation marks (specially commas and full-stops) have been used correctly.
• Precise use of vocabulary and capitalization.
• Formal and academic writing.
Grade for Aspect 5
Comment for Aspect 5
Overall feedback
Feedback for the author
2. After reading Chapter 8, I learned about the firm’s production, its short
and long-run time frame, costs, technological and globalization changes,
externalities, and scope economics. The author starts with an efficient
output, which is necessary for a firm to survive. It displays cost reduction
and ensures profitability, boosting a company’s stock market worth.
Efficiency in both technological and economic terms exists, and both are
crucial for any business that works within a limited budget.
The three-time periods in economics are short run, long run, and very
long run. While all production parameters are changeable over the long
run, at least one production component is fixed in the near term. New
technology advances gradually over a very long period. In the near term,
adding workers is easier than investing in new capital, yet capital is a
significant deciding factor in both the short and long terms.
A cutting-edge board laminating technique was created by Black
Diamond Snowboards (BDS) for the immediate manufacture of
snowboards. The creator built a production line with four workstations
and discovered that while the total output was positive, the marginal
product of each new worker decreased. Because of the law of
diminishing returns, adding a worker would result in lower total output.
Also computed was the average output per worker.
In this section on cost in the short run, fixed and variable costs are
described along with the cost structure for making snowboards at Black
Diamond. There are also definitions for typical fixed, variable, and overall
expenses. It explains the connection between marginal cost and
marginal product as well as the relationship between average variable
cost and average product. The sentence that ends the text states that
marginal cost is at its lowest at the output level when marginal product is
at its highest.
While the unprofitable producers must understand fixed and variable
costs. A manufacturing plan for maximizing profits is necessary when
committing to fixed expenses. Production should continue if variable
costs can be met. Sunk costs cannot be recouped. Given opportunity
costs and changing market conditions, persistent unprofitability justifies
firm termination.
The essay also discusses economies of scale and how they affect
production costs as production size grows. A bigger production scale
has advantages in terms of capital consumption, production efficiency,
and work specialization. Beyond a certain point, however, increasing the
number of production results in diseconomies of scale, driving up costs
due to difficult coordination, costly quality control monitoring, and
management considerations. These events are explained by expanding,
constant, and diminishing returns to scale.
Technology helps to save costs, encourages the development of new
products, and has a generally beneficial economic effect. Small
enterprises and well-established organizations may both benefit from its
dissemination and implementation because it is done in a variety of
ways. Patent protection generally fosters development. Globalization is
accelerated by modern communication technologies.
“Clusters” are another word for groups of companies that specialize in
comparable products or fields of study. They produce new products,
reduced prices, and externalities. Economies of scope occur when
producing more goods at a lower unit cost, and learning by doing aids in
reducing costs and boosting efficiency.
The market structure is determined by production efficiency, which is
essential for a company’s existence. The use of effective techniques
determines cost, market type, and competitiveness. Scale economies,
which are covered in the following chapters, are necessary for market
structure.
After analyzing Chapter 9 carefully, I learned how firms compete in the
market, industry supply in the short and long run, and perfect
competition and market efficiency. The author begins with the
competitive marketplace and market characteristics and shows that
although a monopolist only has one provider, a competitive market
contains several small suppliers manufacturing comparable goods.
When all vendors produce similar items, there is perfect competition and
no one can control the market. Competitive suppliers, who are price
takers, want to maximize profits. In the sense that providers want to turn
a profit, all marketplaces are competitive.
In the market characteristics, there are a lot of tiny businesses,
standardized products, many buyers, complete buyer information, free
admission and exit, and many small enterprises in a completely
competitive market. The firm’s demand curve is horizontal, which
enables the provider to sell any production at market value. The MC
curve is crucial in making decisions that maximize profits.
Whereas, for the purpose of examining how different businesses choose
their supplies, the marginal revenue idea is crucial. In a market with
perfect competition, a company’s marginal profit is equal to the product’s
price. The ideal amount to supply at any given price must be determined
using the firm’s marginal cost curve. The ideal quantity to supply is
determined by the intersection of the firm’s marginal cost curve and
demand curve, and the best supply response is defined by the marginal
cost curve.
If it is about the dynamics: entry and exit, market equilibrium depend on
profit levels in the near run. While losses cause businesses to leave the
market and change the supply curve, economic profits draw new
players. Long-term equilibrium is determined by economic earnings,
which are based on accounting and economic costs while deciding
whether to enter or exit the market.
In the industry supply, in the long run, the minimum of the representative
firm’s long-run ATC curve, the long-run supply curve under perfect
competition is horizontal. If profits are generated, new businesses enter
the market, which changes the short-run supply curve and creates a new
long-run equilibrium. Depending on whether costs rise or fall with
industrial production size, the industry’s long-term supply curve may be
either upward or downward-sloped.
Through outsourcing to countries with cheaper wages and simpler
communications, globalization, and technology have helped businesses
save expenses. Larger companies with scale economies have resulted
from this, wiping out sectors in affluent nations. Workers who have been
laid off must retrain or transition to the service industry. For home
sectors, especially in computers, globalization also lowers input costs.
In perfect competition and market efficiency, for resource allocation,
economists flavor competitive markets because they provide effective
use of resources. The usage of resources up to the point where supply
and demand prices are equal is ensured by perfect competition. On the
other hand, monopolies result in inefficient allocation since they do not
consider the marginal cost.
Aspect 1
Have they read the right chapter(s) for this workshop?
Grade for Aspect 1
Comment for Aspect 1
Aspect 2
Content:
• Clear topic sentence.
• The main points are covered.
• Demonstrates clear understanding of information in the text.
Grade for Aspect 2
Comment for Aspect 2
Aspect 3
Cohesiveness:
• Clear relationships between ideas.
• Connectors have been used correctly.
• The summary is organized properly and ideas are easy to follow.
• Ties together information from different sections.
Grade for Aspect 3
Comment for Aspect 3
Aspect 4
Paraphrasing:
• No text similarity and direct copying from the textbook.
• The summary communicates the same meaning.
Grade for Aspect 4
Comment for Aspect 4
Aspect 5
Grammar and vocabulary:
• Sentences are correct and well-structured.
• Punctuation marks (specially commas and full-stops) have been used correctly.
• Precise use of vocabulary and capitalization.
• Formal and academic writing.
Grade for Aspect 5
Comment for Aspect 5
Overall feedback
Feedback for the author
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including more than 28 million who’ve watched his TED Talk based
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Follow the link below to access Simon’s Ted Talk.

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