market maximizers, minimizers, and efficiency article review

market maximizers, minimizers, and efficiency article review

The article” market maximizers, minimizers, and efficiency” perfectly covers the aspect of market equilibrium in a business environment. The author tries to explain how producers and consumers try to maximize their profits in the process of business transactions.  The author of the article,” market maximizers, minimizers and efficiency,” goes ahead to explain how forces of demand and supply determine the price of goods.  Information in the article clearly shows things that should be done if economic equilibrium has to be attained. Although the author of the article has clear points, he should use more diagrams in explaining his ideas.

At the beginning of the article, the author explains that while consumers maximize utility, firms, on the other hand, try their level best to maximize their economic profit. According to the article, individuals behave in a way, indicating that they are seeking to gain maximally from anything. Another information obtained from the article is that activities undertaken by firms and consumers have both advantages and opportunity costs. The presence of benefits, as well as prices, will trigger consumers and firms to come up with solutions that will make a maximum net profit to be realized.

Marginal benefit is explained as the level at which a unit of activity results to increment in its over-all benefit. Conversely, the marginal cost is described in the article as the rate at which total cost might be increased as a result of putting one more unit in an activity.  The marginal decision rule, therefore, comes in handy while evaluating the amount of an event that might maximize its net benefit.

The author of the article continues by stating that both producers and consumers ought to have property rights to goods and services produced and products and services bought respectively. The term property rights are described as rules that govern how one can use a particular resource. According to the article, the process of exchanging items in the market is always more efficient when the issue of property rights is incorporated. Through the aspect of property rights, one can determine the owner of a particular item. Furthermore, the author of the article also indicates the conditions that are required for the effective distribution of resources. Firstly, the exclusive right property should provide its owners with the chance to ensure other people from using their resources. Movable property right, on the other hand, gives owners of a particular item the right to either sell or lease it. The article goes further to explain that market failure is a condition whereby the market cannot generate an efficient allocation of resources.

By reading the article, one can understand that price of items in a market is mostly determined by demand and supply. However, there are cases whereby some buyers and sellers can influence the prices of items in a market setting.  As one continues reading the articles, he or she gets to understand that external cost and external benefit. While external cost is the cost that is brought about by factors that are outside the market exchange, the external benefit is described as a step taken by an individual or firm to create benefit to other people outside the market agreement. The article comes to an end by the author mentioning the following about common property resources. According to the author of the article, property resources are “resources of which no property rights have been defined.”  Furthermore, it (the article) explains how it is hard for people to protect common property rights giving an example of how buffalos almost became extinct in the United States while the population of cows remained stable.

In conclusion, the article, “market maximizers, minimizers, and efficiency” is relevant in the study of economics since it contains vital points on things that bring about market equilibrium in business. The article review contains the things producers and consumers do in order to maintain a state of market equilibrium. For instance, while consumers are struggling to maximize utility, producers try their level best to ensure that they get maximum economic profits. Firms and consumers also participate in activities that are advantageous to opportunity cost. Additionally, property rights are defined, and their benefit clearly stated in this article review. Notably, the importance of using property rights is that it makes the process of buying and selling goods to be easy. The use of property rights also ensures that an individual can quickly identify the owner of a particular item in the market. This article review also discusses how both external cost and external benefits affect business activities in a specific region. After going through this article review, one gets to understand the issue of demand and supply always determines the fact prices of goods.