Maximizing Profits in the Present Day and Essay

Download this Essay in word format (.doc)

Note: Sample below may appear distorted but all corresponding word document files contain proper formatting

Excerpt from Essay:

Maximizing Profits

In the present day and age, several market structures are existent in the global economy. Each and every market structure is distinct in its way of being run and the power that it has over market prices, trend setting and demand. The key element that helps in distinguishing between different market structures is mainly the amount of competition present between several producers of a single type of product. In this paper, the characteristics and means of maximizing profits alongside the barriers to enter the market will be seen and the role of each structure in an economy will be explained.

Markets in which there is a high amount of competition (mostly referred to as competitive markets) are such that no single producer or consumer has the ability to alone influence the price of products in them. This means that if a producer tries to exploit consumers by raising its prices to a range that doesn't match the general price of the product, consumers will switch to buying the product from another of the infinite producers present in the market. Similarly, if a consumer tries to bargain and purchase a product at a lower price, he will not be successful in doing so because of an infinite number of other people willing to purchase the product at the chosen price. Most producers provide the same kind of good or service and generally, everyone is well-aware of the prices and quality of commodities. Also, in such a market, it is fairly easy for a person willing to produce a product to enter or exit, since there are no barriers in doing so.

In a competitive market, prices of commodities are determined by finding the equilibrium of the market's demand that is the willingness for people to purchase goods at a certain range of prices, and the market's supply, that is the willingness of producers to supply a good at a range of prices. The point of equilibrium of these two is known as the market equilibrium price. (Grant, 2008)

When it comes to the determination of the kinds of products to produce, producers are usually signalled to switch production from one commodity to another through the changes in prices. Wherever it is observed that the prices and profits earned are high, production is quickly switched into the making of that commodity. When prices are falling, the amount of output being produced is reduced. As a whole, the prices are similar in a competitive market, and the only way to increase profits is by reducing the costs of production and keeping the price constant, or by reducing the price of a commodity in such a manner that the price cut is not matched by any other producer. In this way, sales and profits may increase. However, usually, if a single firm increases its profits because of the introduction of a new method of production, the method is soon revealed to other producers as well. Thus, in a competitive market, such situations of thriving are mostly short lived.

Competitive markets play an important role in an economy. It is obvious through the information given above that a single producer cannot alone influence the market price, and there is always a battle of gaining a relatively higher market share by keeping prices the lowest. Therefore, this kind of market structure does not allow unnecessary profits to be made by producers, meaning there is an efficient use of scare resources. Also, whenever an increase in prices is observed, production is switched into the making of that commodity almost immediately and in this way, prices remain low due to the high amount of competition.

It is not incorrect to say a monopolistic market structure is perhaps the complete opposite of a competitive market structure. A monopoly exists when there is only one producer of a good, who has a high proportion of the market share. This one producer has complete power to set the price at its own will and because of the lack of other producers in the market, consumers have no other choice but to accept the price given to them for the purchase of that commodity.

A monopoly usually produces goods and services in bulk and therefore achieves internal economies of scale,…[continue]

Cite This Essay:

"Maximizing Profits In The Present Day And" (2012, July 01) Retrieved October 23, 2016, from

"Maximizing Profits In The Present Day And" 01 July 2012. Web.23 October. 2016. <>

"Maximizing Profits In The Present Day And", 01 July 2012, Accessed.23 October. 2016,

Other Documents Pertaining To This Topic

  • How Can We Make Profit Through Investing on Stock Market

    profit through investing on Stock Market Generally, all over the world financial markets exemplify a state of intricate and inscrutable situation. These marketplaces are of immense significance in the western nations, where the constituents employ their expertise to invest and generate profit whilst formulating a pool of funds, statistics, derivatives, shares and calculation intricacy. These constituents or elements are those investment maestros who are the whole and sole performers of

  • Art Practice in the Past and Present

    Art Practice in the Past and Present Art practice A skill or mastery that stimulates the process of thought, amusement, and emotions is called an art. It is also defined as a special quality used by many people to express their feelings, approach and position. Dating back to 50,000 years ago, art has various forms that ground itself from sculptures, rock paintings, wall craving to modern paintings. Countries like Egypt, Persia, India,

  • For Profit Education vs Non Profit Education

    NPSAS was the only study in 1996 that encompassed the people who enrolled in the for-profit institutions which is why not even the very basic criteria of the for-profit sector and its educational setup has been well-recognized (Breneman, Pusser and Turner 2000; Chung, 2006). The confirmation that the students who had some sort of shortcoming whether in the financial sector, minority aspect or admittance-timeline factor were the ones who mainly

  • Private Daycares Private Day Care

    The author appears to take a positive view of social welfare, as they are in favor of the government support which is given to those who cannot afford to pay for child care alone. T his also demonstrates that the author takes a positive view toward providing assistance to those who are casualties of capitalism. The author is likely to have adopted this paradigm in the article as they have

  • IT Strategies to Maximize the

    However, during the little more than 10 years of this research line, contradictory results have been found (Brynjolfsson, Hitt, & Yang, 2002). From the 1970s to 1980s, those companies that invested more in IT suffered a relative setback in the work factor productivity indexes. This paper will discuss the relationship between IT and competitive advantage in following content. We believe that IT is necessary to improve competitive position of

  • Elizabeth Arden Day Spa Current

    It is recommended that Red Door adopt a buffet-style loyalty program. The customer can choose from a menu of different loyalty plan options, each with a different value proposition. The different plans can help to differentiate the types of customers further, based on their preferences by identifying their preferences. For example, a customer may choose as a reward for their plan a high-end treatment they would not normally buy

  • Business Plan for a Residential and Day Treatment Facility

    Business Plan Assisted Living Facilities Residential and Day Treatment Facility Business Plan Residay Home and Residential Care provides assisted living solutions for senior adults. Residay Home and Residential Care is dedicated to making the provision of the highest quality care to senior citizens requiring or desiring an assisted living facility. Residay Home and Residential Care is located in the Tennessee Valley Area of North Alabama and is an alternative to the generally larger

Read Full Essay
Copyright 2016 . All Rights Reserved