To understand why firms make the choices they do in the business environment we must understand the structure of the market which exists in competitive capitalism. It is important to be able to distinguish between types of markets to better understand how they behave in the real world. Why firms behave the way they do depends on a number of considerations, such as the number of buyers and sellers in market, and to what extent …showed first 75 words of 2434 total…

…showed last 75 words of 2434 total…prices are inconsistent and adjust according to the changes in the price level, resulting to the levels if capital and labour to be unchanged and the level of real output to be unchanged when at full employment. In the long run even though the business cycle contractionary phase that shows a droop in economic activity and an expansionary phase that shows a boom in economic activity the economy will remain on its trend real GDP.