Final answer:
Market structure and cost structure are crucial factors in determining profitability in every industry. Understanding the market structure helps companies determine their pricing and margin requirements, while calculating the cost structure helps them make decisions about production quantities and prices.
Step-by-step explanation:
In every industry, companies are embedded in a market structure, which has a cost structure associated with it that dictates the margins needed to achieve profitability.
Market structure refers to how competitive the industry is, and it affects factors such as pricing and profit margins. It is determined by factors like the number of competitors, barriers to entry, and product differentiation.
To determine the cost structure, firms need to calculate total cost, average variable cost, average total cost, and marginal cost. These calculations are done based on the fixed and variable costs of production.