M3 Discussion Topic
Entrepreneurs form an essential pillar in economic development in various regions and the country at large. Successful entrepreneurs refer to individuals who have been able to develop new products, design technology or identify new markets through the combination of various production factors successfully. For a person to be a successful entrepreneur, they ought to possess some essential characteristics. According to Djankov et al. (2007), successful entrepreneurs exhibit characteristics such as creativity, self-motivation, resilient, agile, trustworthy, patient and passionate. Some of the most influential and profitable entrepreneurs include such as Mark Cuban, Rupert Murdoch, Tim O’Reilly, Richard Branson and Kevin Rose.
I suppose producers consider the various concepts involved in determining production dynamics such as AFC, AVC and MC. These concepts are essential in determining whether production will be profitable to a firm and provide insights regarding future effects of the production. Moreover, these concepts determine the price of products depending on the nature of market and type of competition to be incurred.
Implicit costs refer to money and time invested in a business by the owner. It is the opportunity cost, and the owner does not make payment to an outsider. Implicit cost understates economic profit because it considers all the costs experienced by a company including opportunity costs. Consequently, business owners fail to earn interests if the same resources could have been invested elsewhere (Wessels, 1997). Some of the implicit costs that business owner ought to consider include such as forgone rent, interest and salaries.
In perfectly competitive markets, different firms do not have control over the price or quantity of a product in the market. Companies in such markets cannot provide products at lower or higher prices. Therefore, companies in such markets have to take the price the market provides and hence they are referred to as price takers. Examples of price taker companies are those in the agricultural sector such as wheat and those dealing with bonds and stocks.
Djankov, S., Qian, Y., Roland, G., & Zhuravskaya, E. (2007). What makes a successful entrepreneur? Evidence from Brazil. Center for Economic and Financial Research (CEFIR) in its series Working Papers with, (w0104).
Wessels, W. J. (1997). Microeconomics the easy way. Hauppauge, NY: Barron’s Educational Series.