COSTS OF PRODUCTION Essay Example | Topics and Well Written Essays - 750 words

COSTS OF PRODUCTION - Essay caseTo understand the concept indivisibility of some factor inputs, we can look at some examples from the Tropical beguiler caf. Some of the indivisible inputs include the business idea, entrepreneurial skills, and the skills of individual workers among others. In thiscase, it isclear that not on the whole inputs all divisible. Therefore, the indivisible inputs should be utilized efficiently to avoid wastage.There exist several characteristics or features of a competitive merchandise structure. For instance, in that location argon no barriers to entry in the market. In this regard, firms are free to penetrate or exit the market on their own pleasure. As a result, there are many small firms that serve the entire market such that no firm has fit power to control the market (Dwivedi, 2006). Therefore, the price of commodities in such a market are intractable by the forces of demand and supply. In essence, the firms have to set prices that are in line w ith the existing market price. Generally, it can be arguedthat the firms in such a market are price takers.Van & Camesasca (2001) call down that a perfectively competitive firm offers identical products to that of competitors. In this regard, the consumers can switch from one firm to the other since all products are close substitutes. Actually, the products serve the same customers needs and wants and, therefore, firms are forced to devise whimsical means of surviving the competition. In essence, the homogeneity of products in perfectively competitive markets creates a cut-throat contest among the firms in the competition. perfectly competitive firms operate with resources that are easily transferable from one industry to another. In essence, the firms are tractile to changes and, therefore, can fit in more than one industry. Studies have shown that most perfectly competitive firms do not operate in one industry for their entire life of