Volume adjusters

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In the theory of economics ( microeconomics ), the market behavior of a supplier is called a volume adjustor (or price taker ) if he accepts the prevailing market price as a given (price as a date ) and adjusts his sales volume to this price. The counterparty of the quantity adjuster is the quantity fixer .

Assuming that this provider aims to maximize profit , the difference between revenue and variable unit costs should be maximized. It is only offered if this difference is above the fixed costs . In perfect competition , all providers act as volume adjusters, as none has sufficient market power to influence the price.

Formal representation

The problem of maximizing profit can be formulated as follows when adjusting the quantities:

Determine the optimal sales volume so that the profit is maximum. The revenue function refers to the given market price and the cost function depending on the quantity produced.

A maximum can only exist if

1. the first derivative of the profit function is zero:

and

2. the second derivative of the profit function is less than or equal to zero:

.

It follows from the first condition that it must apply, which leads to the following equation:

.

In addition, it follows from the second condition that:

   and following from it    .

Because one usually has to assume that marginal costs at company level decrease with increasing production volume, the following always applies for the individual provider:

.

This is a contradiction of the maximum condition. From this it follows that there cannot be an absolute maximum profit for the quantity matcher. The most important reason for this is the existence of economies of scale (see marginal costs ). A producer can always increase his profit at a given price by increasing his production and the like. a. by replacing labor with capital ( law of mass production ).

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