Thursday, August 11, 2011

Profit Assumption online tutoring

Again, a determinate solution to the price output problem in other market forms (perfect competition, monopoly and monopolistic competition) is arrived at by assuming profit maximizing motive on the part of firms. But some economists have challenged the validity of the profit maximizing hypothesis in oligopolistic situations. According to Prof. Rothschild, oligopolists aim at maximizing their security or achieving reasonable amount of stable profits over a long period of time rather than maximizing profits at a time. On the other hand, Prof. Baumol thinks that in oligopolistic circumstances it is legitimate to assume sales maximizing objective on the part of the firms. Some other economists think that managers of oligopolistic firms maximize their own utility function. Still others like R.L. Morris think that firms try to maximize their growth rate. Finally, some economists assert that oligopolists do not maximize anything, they reveal as merely satisfied. In other words, they aim to obtain satisfactory profits rather than maximum profits. All this controversy about the real objective of the firms relates especially to the oligopolistic firms. This controversy about the most probable objective of the oligopolists further introduces interminacy in the analysis of price and output under oligopoly.

In view of above, there is no single determinate solution of the oligopoly problem but a wide variety of possible solutions, each depending upon different assumptions. It is worth nothing as to what exactly economists mean by indeterminacy. When no single solution of a problem is possible, economists generally say that the problem has no determinate solution. thus economists usually speak of indeterminacy where mathematics would speak of a multiplicity of solutions.

In a general way, economists speak of indeterminacy if not enough information is available to give a safe and unambiguous answer to a question before them. If they wish to solve a problem for example, how the price of a certain commodity will change under certain conditions- but find that the data which are assumed to be “given” would permit of two or more (perhaps of an infinite number of) answers, they will say that the problem has no determinate programming solutions.”

Thursday, August 4, 2011

Firm and Pricing assignment help

The theory of firm and pricing which we are concerned in this aspect is primarily an analysis of equilibrium of the firm and industry under various market forms. When different firms are producing differentiated products, it is difficult to define an industry and the analysis of equilibrium of the industry under such conditions is full of conceptual difficulties. When different firms are producing diffferentiated products, each would have its separate demand and supply of its particular product. Therefore, in this case we cannot sum up the demand and supply of the various firms producing differentiated products to obtain the supply and the demand for the industry. It was in connection with the industry composed of various firms producing homogeneous, undifferentiated products that the concepts of supply and demand were forged by Marshall.

When various firms are producing same or homogeneous products, it is possible to identify an industry and the supply and the demand for the product of that industry can be ascertained. But when different firms are producing differentiated (but similar) products, it is not easy to identify an industry having its own supply and demand. Prof. Chamberlin in his concept of monopolisitc competition where various firms produce differentiated but similar product has called the collection of these firms as group rather than industry. Moreover, it is because of this difficulty or viewing supply and demand for group of firms producing differentiated products and also because of greater importance of behaviour of individual firms having control over their own products that in recent years emphasis has been shifted from the equilibrium from the equilibrium of the industry to the equilibrium of the firm. However, equilibrium of the industry under conditions of perfect competition, where various firms produce homogeneous products, retains its importance and usefulness.