Economics Essay Example | Topics and Well Written Essays - 1500 words - 44

Economics - Essay Example The other factor to be considered is the supply- demand aspect. The firm should be able to focus majorly on what the market. The market should be able to determine the amount of products being offered. The supply to the market should be in line with the demand in that production increases with an increase in demand and a decrease in demand should reduce the production. This should be done with little interference to the core agenda of profit maximization. While finding equilibrium between the supply and demand factors of production which include labour and capital should be considered as well. The internal factors should integrate well with external factors in ensuring that an informed decision is made. The strategies involved should satisfy the internal market while aiming at benefiting from the diseconomies of scale. A lower cost per unit will be achieved by increasing the size of the firm. The government carry out fiscal policy with an effort of sustaining the economy. The efforts by the government are to ensure increased aggregate demand. The policies by the government include government borrowing. In some instances the government decides in borrowing from the private sector. The result is reduced power to spend by the manufacturing firms as the available funds focuses more on ensuring a balanced in their profit making goals and reduced expenditure. The government on the other hand borrows from the sector to reduce the government deficit. The result of borrowing from the sector is reduces the spending power of the firms. The firm should critically analyse the government decisions to borrow from them as a means of increasing the aggregate demand (Grossman & Hart, 1986). The firm should consider its internal goals before falling victim to government policies. The firms should decide on which policies are to be adopted and which are to be ignored. Adjusting to these pol icies may assist the firm operate at