A. Market Structure:
It is the characteristics of the market that determine the economic environment in which the firm operates. Market structure manages the level of pricing power that control by managers in both short and long run. The essential economic characteristics in describing the market structures are:
● The nature of competition, the degree of product differentiation among competing producers, and the pricing model in that market.
● The number and the size of firms in the market that produce identical goods and services.
● The probability of new firms to enter the market when there are earning economic profits.
There are different types of market structure including competitive market, oligopoly market, and the perfectly competitive market.
B. The Short-run
In economics, the short-run is a concept that refer to a period of time sufficiently
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Long run:
The long run is a period of time that long enough to allow the firms to make changes in all fixed factors of production. Thus, in the long-run, all fixed inputs become variable inputs, which assists firms to increase their output. As an example of altering all factors of production used in the productive process; changing capital equipment; replacing old lower-capacity plants by the new plants. D. Economic of Scale:
Economies of scale mean the decreases in per unit cost of production as the volume of production increases. In other word, economies of scale typically occur when long-run average cost decreases as a number of quantity increases.
There are three reasons results economies of scale. First, fixed costs of production can be spread over a larger number of units as the volume of units produced increases. Second, obtaining discounts for bulk purchases of raw resources used in production. Finally, firms can reduce costs because of the increase in volume such in the case of acquiring specialized equipment or labor which lead to more efficiency.
D. Diseconomies of