Economic Concepts free essay sample

This paper discusses some of the major concepts that are involved in the study of economics. This paper discusses some important concepts of economics including inefficiency of monopolies and law of diminishing returns. The paper details several different concepts and then explains each one with the help of a graph. According to this paper, it is important to understand that monopolistic firms are not likely to be very cost-conscious which makes both the firm and its employees rather inefficient. In order to support this theory, the author then enlists help of a graph that compares monopoly with perfect competition. It is believed every firm is operating with the sole objective of maximizing profits. But for maximization of profits, it is important to reduce costs and increase productivity. The lower the costs are, the wider the profit margin would be. Therefore the firms would always try to operate at a point where their average cost is at its minimum. We will write a custom essay sample on Economic Concepts or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page This is an ideal situation, which is not always achievable but is still the most important objective of a profit-maximizing firm. But it is important to understand that average cost curve may differ in the case of monopoly and perfect competition. But it is true that both types of firms would try to remain at the lowest level of their average cost curve in order to maximize its profits. This is a simple concept to understand.