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Economics Essay On Negative Expansion And Inflation

d Major characteristics of the structure of Indian automotive market The market of Indian Automotive or automobile is a competitive yet monopolistic. TATA, Maruti Suzuki, Mahindra and Mahindra, Hindustan Motors, Ashok Leyland are few well known manufacturers. There are huge numbers of sellers and buyers as per the monopolistically competitive market concept. Thus no single manufacturer has the power to influence the strategy of pricing. Hence no single manufacturer can get complete access in controlling the market. Moreover in this market, each products are a close substitute of the other. Nevertheless, in Indian market it can be observed that high competition levels are faced by the firms which is reflected in the sales figures of the manufacturing firms. As soon as an old firms gets a chance to generate supernormal profits, there enters a new firm. Thus it can be observed that as supplies rises in the market, the production level tends to decline thus enabling the companies to make only normal profits (Blanchard, 2018). In the same way if the old firms starts making loss then the marginal firms will automatically exit from the competition which will again lead to decrease in supply and thereby increase in the price of products. As there are innumerable goods, thus the consumer would not be able to gain a complete knowledge about the market and manufacturing goods (Agénor & Montiel, 2015). The consumer will also not be able to get the actual level of price of the products as they are close substituent of each other. Apart from these factors, in order to acquire customer base, advertisement plays an essential role. Thus selling impacts both demand and production cost. Hence the level of price of goods in Indian automobile industry shall be reduced for an increased percentage in sales. Reference List Agénor, P. R., & Montiel, P. J. (2015). Development macroeconomics. Princeton University Press. Agénor, P. R., & Montiel, P. J. (2015). Development macroeconomics. Princeton University Press. Blanchard, O. (2018). Distortions in Macroeconomics. NBER Macroeconomics Annual, 32(1), 547-554. Branch, W. A., & McGough, B. (2018). Heterogeneous expectations and micro-foundations in macroeconomics. Handbook of Computational Economics, 4, 3-62. Fontana, G., & Sawyer, M. (2016). Towards post-Keynesian ecological macroeconomics. Ecological Economics, 121, 186-195. Ghysels, E. (2016). Macroeconomics and the reality of mixed frequency data. Journal of Econometrics, 193(2), 294-314. Goodwin, N., Harris, J. M., Nelson, J. A., Roach, B., & Torras, M. (2015). Macroeconomics in context. Routledge. Piazzesi, M., & Schneider, M. (2016). Housing and macroeconomics. In Handbook of macroeconomics (Vol. 2, pp. 1547-1640). Elsevier. Quadrini, V., & Ríos-Rull, J. V. (2015). Inequality in macroeconomics. In Handbook of Income Distribution (Vol. 2, pp. 1229-1302). Elsevier. Reis, R. (2018). Is something really wrong with macroeconomics?. Oxford Review of Economic Policy, 34(1-2), 132-155. Stiglitz, J. E. (2018). Where modern macroeconomics went wrong. Oxford Review of Economic Policy, 34(1-2), 70-106.


Subject Name: Economics

Level: Undergraduate


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