Most firms are much smaller than this, but in all rich economies, most people work for large firms. Walmart had around 3,500 employees in 1973. Fifty years later, Intel employed around 110,000 people, and FedEx 245,000. 1 In the year the book was published, the firms Intel and FedEx each employed only a few thousand people in the US. Schumacher’s Small is Beautiful, published in 1973, advocated small-scale production by individuals and groups in an economic system designed to emphasize happiness rather than profits. Economic policymakers use elasticities of demand to design tax policies, and reduce firms’ market power through competition policy.Įrnst F. Those with fewer competitors can achieve higher profit margins, and monopoly rents. Firms can increase profit through product selection and advertising.The gains from trade are shared between consumers and firm owners, but prices above marginal cost cause market failure and deadweight loss.The responsiveness of consumers to a price change is measured by the elasticity of demand, which affects the firm’s price and profit margin.Technological and cost advantages of large-scale production favour large firms.
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