Economics Theory Applications Research Paper Example | Topics and Well Written Essays - 2000 words

economic science Theory Applications - Research Paper ExampleAccording to Mandal (2007, 97) this problem can totally be primed(p) based on determine mechanisms that has been known to use forces of supply and imply that characterize different products. This is because set mechanism is used to refer to the mechanism that uses equipment casualtys of products as a signal to both the buyers as vigorous as sellers in some(prenominal) market as to what the market has in store for them, and what trend to follow. This is what forms the shopping center of microeconomic theory where demand, supply and quality prices have a significant role to play. This paper explores the Malaysian market by focusing on Astro satellite TV monopoly to determine the problems that Malaysian satellite telecastings market is facing and attempt to solve the problem using microeconomics theory. Microeconomics theory This theory stipulates that demand is the willingness and the ability for a consumer to buy a particular product within a specified design of time. Therefore, if all other factors atomic number 18 held constant, it follows that as prices of goods increases the demand decreases proportionately (Tsoulfidis, 2009, 30). This means that demand and price atomic number 18 inversely proportional. A lower demand of goods means a get downd amount of quantity purchased by consumers. The amount of goods consumers buy at higher prices decrease because as the prices go up, so is the opportunity follow of buying that good or service. People will therefore tend to buy inexpensive goods or services, and avoid buying that product that will force them to forego certain goods or services that are of more value to the consumer. This theory is applied mainly in a monopolistic market where it is only one supplier of goods and services with many consumers that exist, eliminating the case of competition (Ghai and Gupta, 2002, 2). What is Monopoly? Monopoly is a situation characterized by the cosmos of a single producer in a market who is in control and not with any close competition whatsoever of supplying a particular product. This means that the elasticity of demand tends to reduce to almost zero. A company enjoying monopoly has some benefits such as the ability to be innovative with the increment of its product and the domination of the demands of the customers (Kirzner, 1997, 65). This is, in addition to, setting its own price standards, orderliness and predictability. The constraints that happen to be either legal or natural protecting the monopoly of the firm from its competitor often generate the close off to entry to the monopoly market. To make the best use of the profit, monopolist should generate at an output that the marginal live is equal to marginal revenue. However, the biggest problem of monopoly market is that monopolist is a price maker rather than those price takers in a competitive market (Dwivedi, 2002, 38). This is because the monopoly firm wil l only continue enjoying maximum mesh so long as entry of other firms into the market is blocked. This may either be by nature or artificially. Therefore, the firm will continue to produce, and even function at a loss on condition that the losses the firm makes do not in any way exceed its icy costs (Ghai and Gupta, 2002, 3). This means that the firm will only close when the losses are in tautological of the fixed costs of the company. With this advantage, monopoly will charge at the price which is in excess of the marginal price and marginal income, for whatever