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Markets versus Firms - Outline
Thesis Statement: Regardless of the differences including size and operation levels, firms and
markets have similar structures thus taking almost similar economic processes.
I. Introduction
II. Similarities
A. Profit-maximization output
B. Price discrimination
III. Differences
A. Scope of operation
B. Governance and regulation
IV. Conclusion
Running head: MARKETS VERSUS FIRMS
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Markets versus Firms
Name
Institution
MARKETS VERSUS FIRMS
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Markets versus Firms
In chapter 4, it is established that markets and firms are linked and interrelated. The two
words are commonly used but misunderstood by many people. Although these two players in the
economy have many similarities, they are entirely different entities. Any business is situated in a
particular market, and thus there is the need to identify the similarities that firms may have to the
markets in which they are contained. The situation of a firm within a market allows it to utilize
the strategic advantages of the firm itself as well as those of the particular market. Regardless of
the differences including size and operation levels, firms and markets have similar structures thus
taking almost similar economic processes.
One similarity between firms and markets is the profit-maximizing output structures. In
the short run, both firms and markets have fixed resources. As such, they maximize profits or
minimize losses by adjusting their outputs. They produce only when the difference between the
total revenue and total cost is profitable (Zimmerman, 2017). Another common feature
observable in firms and markets is the issue of price discrimination. With the existence of
monopolies and the preferences in the market, markets can exert price discrimination whereby
goods and services can be sold for different prices without the...