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Table Of Contents
  • Oligopolistic markets
  • Cost forecasting
  • Fiscal and monetary policies
  • Demand, Supply, and Elasticities

Oligopolistic markets

An oligopolistic market is an industry structure whereby a few companies or organizations rule over others providing similar goods and services. Since the number of players is limited, competition is also limited, allowing each company to operate successfully. This structure often breeds partnerships between companies, fostering a spirit of cooperation. Major airlines like British Airlines and American Airlines are a good example of an oligopoly because they dominate the flight industry in the UK and the USA respectively.

Cost forecasting

Managing finances requires proper planning to avoid problems that may unfavorably affect payment schedules or ruin the reputation of a company. That’s why companies today have invested in cost forecasting tools to ensure the smooth running of their businesses. Cost forecasting is an important exercise in determining how much is spent, where. It helps the management make timely payments and avoid overspending on company processes and projects.

Fiscal and monetary policies

The fiscal policy explains how governments change tax rates and their spending levels to influence the economy and aggregate demand. The monetary policy, on the other hand, explains how the interest rates are changed to influence the money supply. Fiscal and monetary policies can influence the demand for goods and services (aggregate demand) because they are both directly related to the factors used to compute the aggregate demand. Some of these factors include consumer expenditures on goods and services, government expenses on goods and services, as well as imports and exports.

Demand, Supply, and Elasticities

Demand refers to the number of customers wishing to buy a certain product and supply is the number of goods available for the customers to buy. When there is an increase in the number of products (increase in supply), the price of the products reduces and the demand can rise due to the low price. At some point, this high demand will cause the supply to decrease. Elasticity is the ratio of the percentage change in the demanded quantity or the supplied quantity to the corresponding change in price. It falls under three broad categories; unitary, elastic, and inelastic.