Business Environment Analysis and Research - Political Trade Arguments Essay

Business Environment Analysis and Research - Political Trade Arguments - Essay Example In the following parts of the essay, first an example of stable trade and political relations has been included in which Canada and the United States’ growing trade relations have been highlighted. It is followed by the trade relations between Iran and the United States have been mentioned, highlighting the type of political relation and its fallout on the past and existing trade relations. Before the conclusion part, Most Favoured Nation (MFN) status and current standoff between India and Pakistan have been discussed besides their arguments and justifications have also been evaluated. International trade is dominated and influenced by strong international countries, such as the United States of America. It is a clear and established fact that the international trade, which is mainly run and administered by the operational framework of the World Trade Organization, between countries, regions and international independent trading partners is considerably affected by the bi-lateral relationship between the trading partners. For example, it has been observed that stable and strong bi-lateral, cultural and political relations play a very important role between the countries. Consequently, stable political relations enable them to develop and retain trade relationships as well. For example, the trade between Canada and the United States of America is considerably higher and growing as well because both countries have stable political relations whereas unfriendly political relations between the United States and Iran clearly demonstrates limited trade between these coun tries. In addition, due to the current animosity between the United States and Iran, bilateral trade between these two countries is not growing instead the United States has imposed bilateral trade restrictions and the same attitude is also reflected when Iran enters into bilateral trade agreements with other international countries

Maximizing profits in market structures Essay Example | Topics and Well Written Essays - 1000 words

Maximizing profits in market structures - Essay Example Monopoly – The monopoly is the only producer of a particular good or service; therefore, it has a downward-sloping demand curve. If the firm sells its product at a high price, it will be able to sell only a small quantity because few people would be able to afford it, and there are not substitutes. If the firm would wish to sell more units of the product, it will have to lower its prices (Mankiw, 2009). The type of product may be homogeneous or differentiated and the monopoly firm has full control over its price (Jain & Khanna, 2009). Oligopoly – An oligopoly is a market with only a few suppliers. Because they are so few, actions taken by one seller creates an impact on the other sellers, such that they become interdependent upon each other. They therefore tend to behave pursuant to certain strategies depending on the actions of the other firms (Mankiw, 2009), and there are situations that alternatively present opportunities for conflict and for cooperation. The product may be homogeneous or differentiated (Jain & Khanna, 2009). ... For monopolies, P > MR = MC (price exceeds marginal costs). The firm first determines the output quantity at which it will produce, at the point where marginal revenue and marginal costs are equal. The demand curve is thereafter used to determine the highest price the firm may charge in order to sell the quantity determined. This is so because the demand curve tells the quantity buyers are willing to buy at a certain price. Oligopoly – For oligopolies, the profits a firm makes depends to a great deal of what its competitors make, because there are so few of them supplying the market. Based on this observation, game theory has been developed, the method by which a firm in an oligopoly tries to predict how its competitors will react if it makes a strategic move. For instance, in an oligopoly it is generally observed that firm will lower their price in response to a price reduction by one of the other firms, particularly if the product they produce is homogeneous. However, if one of the firms raises its prices, the other firms do not automatically follow. The reason for this is that the firms whose prices are viewed as too high in comparison with its competitors would lose its buyers to those firms with lower prices, because their products are deemed to be easily substitutable with each other. The result is a kinked demand curve. Barriers to entry Competition - In a competitive market, the barriers to new entrants are low and few, if any, thus the market is open to many sellers and the products are undifferentiated as to be easily substituted. Everybody sells at the same price, and there is always demand at that price. Monopoly - For natural monopolies, barriers to new entrants are high because the