Discussion
Increasing International Competition and Profitability
Economists assume that profit-maximizing firms operate in perfectly competitive markets. However, this assumption does not hold in today's global market, as there are many reasons why markets are not perfectly competitive.
Refer back to the past three weeks, particularly to the principle of comparative advantage and production costs, and review the reasons why companies do not operate in a perfectly competitive market.
Post a 250- to 300-word statement that addresses the following:
• What output strategies might U.S. companies implement to remain profitable when competing with international companies?
• How do market demand, costs, pricing, and competition impact these output strategies?
Read a selection of your colleagues' postings.
Respond by Day 6 to two or more of your colleagues' postings in one or more of the following ways:
• Ask a probing question.
• Share an insight from having read your colleague's posting.
• Offer and support an opinion.
• Make a suggestion.
• Expand on your colleague's posting.
Return to this Discussion in a few days to read the responses to your initial posting. Note what you learned and the insights you gained as a result of the comments your colleagues made.
Be sure to support your work with specific citations from the Learning Resources and any additional sources.
Learning Resources
Required Resources
Readings
• Frank, R. H., & Bernanke, B. S. (2010). Principles of microeconomics, brief edition(2nd ed.). New York, NY: McGraw-Hill/Irwin.
o Chapter 5, "Perfectly Competitive Supply" (pp. 127-158)
Chapter 5 gives you insight into the supply side of the market. The chapter also revisits the cost-benefit principle from the seller's perspective and examines the factors that a rational seller would consider while marketing a product.
Focus on the graphic interpretations of individual and market supply curves. Review the law of supply, and study the various determinants of supply.
o Chapter 6, "Efficiency, Exchange, and the Invisible Hand in Action" (pp. 159-188)
Chapter 6 introduces the concept of the Pareto efficiency of market equilibrium. The chapter also explains how market equilibrium prices can help in attaining the largest possible total economic surplus. In addition, this chapter focuses on the central role of economic profit and the invisible hand theory of the market.
Focus on the cost of preventing price adjustments and the marginal cost pricing of public services. In addition, study the different graphic interpretations of economic surplus.
Media
• Kahn Academy. (2014d). Economic profit versus accounting profit [Video file]. Retrieved fromhttps://www.khanacademy.org/economics-finance-domain/microeconomics/firm-economic-profit/economic-profit-tutorial/v/economic-profit-vs-accounting-profit
Note: The approximate length of this media piece is 8 minutes.
• Kahn Academy. (2014j). Marginal cost and average total cost [Video file]. Retrieved fromhttps://www.khanacademy.org/economics-finance-domain/microeconomics/firm-economic-profit/average-costs-margin-rev/v/marginal-cost-and-average-total-cost
Note: The approximate length of this media piece is 8 minutes .
• Kahn Academy. (2014f). Fixed, variable, and marginal cost [Video file]. Retrieved fromhttps://www.khanacademy.org/economics-finance-domain/microeconomics/firm-economic-profit/average-costs-tutorial/v/fixed--variable--and-marginal-cost
Note: The approximate length of this media piece is 12 minutes.
Optional Resources
• Frank, R. H., & Bernanke, B. S. (2011). Principles of microeconomics, brief edition (2nd ed.) [Supplemental material]. Retrieved from http://highered.mheducation.com/sites/0077316770/student_view0/index.html