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Word Count: 564
A Market Economy is the most efficient way of organizing economic activities Millions of suppliers firm and consumers buyers make the markets The suppliers and consumers sell and purchase goods that satisfy the wants of consumers and suppliers Suppliers and consumers make rational decisions respond to incentives and make tradeoffs Over all trade makes everyone better off Mankiw If one firm does not meet the wants of the consumer then they will lose their place in the market Sales for most major retailers have risen this quarter while others have fallen The over all sales gain equals 79 Chandler Sales rose because consumers are not bothered by threats of war Also they feel confident in current and future stability of the economy The reason some retailers lost and most gained could be a number of possibilities Prices might be too high for the consumers taste Marketing strategies appealed to consumers tastes Consumers expectation of future prices and economic stability Consumer purchasing goods from some firms dropped This could have been because of price increase of goods sold by retailers Prices of goods rose because of cost increase due to the rise in Average Total Cost Average Total Cost is Total Cost everything that is given up to pay for good divided by Quantity how many goods the firm produces This will be driven up by the Variable Cost costs that vary with the quantity of output produced because of inflation wage increase and cost of goods needed to produce the final good With some firms rising having their Average Total Cost going up and not increasing price they will lose profit Profit is attained by Total Revenue the amount a firm receives for sales of its output divided by Quantity minus Total Cost divided by Quantity multiplied by Quantity Or Profit will equal Price minus Average Total Cost multiplied by Quantity If the Average Total Cost is larger than the price than the firm will
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