Economics - DQ 2 Essay Example | Topics and Well Written Essays - 500 words

Economics - DQ 2 - Essay Example However, the point where marginal cost and marginal revenue intersects represents output which is less than maximum capacity. Thus, there lies inefficiency in production as these firms control the level of supply in order to regulate the prices. This is true in the real world. For example, monopolist firms in developing countries especially those in the provision of public utilities like water and utility set prices too high while controlling quantity. They do not operate in their full efficiency in order to bid up the prices of their goods and services. Thus, most countries where utilities are monopolized are where the highest electricity costs are found. Monopolists take advantage of the situation by using their capacity of influencing price level. Globalization is characterized by the entry of foreign firms in the domestic market and vice versa. This is also a process by which business organizations operate anywhere in order to take advantage of profit opportunities. Globalization is seen as the way of increasing the number of competitors in the market through the entry of new players and the survival of the most efficient ones. Yes, globalization intensifies the market competition in a given country. It is irrefutable that multinationals or huge business organizations operating on three or more markets have gained significant economies of scale and are the most efficient ones. The entry of these players in the domestic market often threatens the local players who are less efficient. Thus, competition heats up as these smaller players cope with the ability of large foreign firms to operate more efficiently and profitably. In so doing, it also tries to safeguard its shares by equipping itself with competencies. Local manufacturers often go beyond their limit. The entry of foreign players pressures them to improve their processes, strengthen their brand image, produce higher quality products, and even double