...LINDSEY APPELGET EGT TASK 1 SUBDOMAIN: 309.1 – ECONOMICS Competency 309.1.1: Marginal Analysis - The graduate correctly applies marginal analysis. Objective 309.1.1.05: Describe the relationship between marginal revenue and marginal cost at the point of profit maximization. Objective 309.1.1.06: Explain the concept of profit maximization. Introduction: Business owners, managers, and aspiring entrepreneurs need to know the best form of business organization to select based on various considerations, including taxes, liability, capital contributions, sharing of profits and losses, management and control, and survivorship. Task: Write an essay (suggested length of 1–3 pages) that explains the relationship between marginal revenue and marginal cost, and the importance of these concepts for profit maximization in which you do the following: A. Define marginal revenue. Marginal Revenue is the change in revenue that results from the sale of one additional unit of output. (McConnell & Brue & Flynn 2012) Marginal revenue is calculated by dividing the change in total revenue by the change in output quantity. 1. Explain its relationship with total revenue. Total revenue is all money/income that a business makes over a period of time from the sale of goods or services. It is calculated by multiplying quantity sold by price. If you know marginal revenue you will be able to tell what total revenues will do if business sales change. If marginal revenue is...
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...EGT 1 Task 1 A. 1. The profit maximization approach used when total revenue and total cost are compared is the largest positive gap or profit gained between total revenue less total cost. In the table provided the largest profit or profit maximization would be $540. When you produce 8 items profit is at its highest point. To calculate total revenue you take the price times the quantity and to calculate total cost you take the sum of variable and fixed costs. 2. The profit maximization approach used when marginal revenue and marginal cost are compared is to take the marginal revenue less the marginal cost. In this process you look at how each additional unit affects total revenue and total cost. Marginal revenue is equal to the change of total revenue divided by change in quantity and Marginal cost is equal to the change in total cost divided by change in quantity. Once marginal cost exceeds marginal revenue it is not effective to produce the product and there is no longer a profit maximization. The profit maximization approach when using marginal revenue and marginal cost is to make as many products as you can until marginal cost equals marginal revenue. B. 1. Marginal revenue it the change in total revenue divided by the change in quantity. To get total revenue so that you can calculate marginal revenue you need to take the price times quantity less total cost. Marginal revenue becomes elastic and stays constant when there is perfect competition. But marginal revenue usually...
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...Economics and Global Business Applications EGT1 Task 1 July 17, 2014 For a company to determine if it is profitable there are various factors that need to be assessed. An organization must produce a product, tangible or intangible, to produce a profit. The product must be produced at a cost that is low enough so that when sold, the mark up of the item is enough to pay the cost of production and make a profit. To determine profit you would deduct the cost of production from the total revenue made. Once an organization can determine the profit margin, it can plan on future endeavors. Total revenue is defined as “the total number of dollars received by a firm from the sale of a product.” (McConnel, 2012) Total revenue is not the profit that is made from selling a product. Total revenue is the money that was made when the product was sold to a consumer. Once total revenue is obtained, profit is determined by deducting the total cost from the total revenue. The relationship can be described as follows, “total revenue is the change that occurs in marginal revenue when one or more units of goods or services are produced” (McConnel, 2012). A change in quantity, whether this change is negative or positive, is when marginal revenue occurs. “Marginal Revenue is the change in total revenue that results from selling one or more unit of output.” (McConnell, 2012) An organization will make additional revenue by selling additional units of output. Marginal revenue is determined...
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...EGT 1: Task 2-309.1.2-08 & 09 Elasticity of demand is the relationship between the demands for a product with respect to its price. Generally, when the demand for a product is high, the price of the product decreases. When demand decreases, prices tend to climb. Products that exhibit the characteristics of elasticity of demand are usually cars, appliances and other luxury items. Items such as clothing, medicine and food are considered to be necessities. Essential items usually possess inelasticity of demand. When this occurs prices do not change significantly. “The Cross-price elasticity of demand measures the rate of response of quantity demanded of one good, due to a price change of another good” (Economics.about.com, 2013). When two similar products are present they are considered to be substitutes for each other. For example, say you have Coke and Pepsi. When the price of Coke rises so will the increased demand for Pepsi and other like products. This is considered to be a positive relationship. The relationship is negative when you have two products that complement each other. For example, say the price of a car increases. When price escalates the demand for tires, its complementary product, will decrease. Income elasticity is a way that economists measure the level that people act in response to changes in their income that may effect the consumer purchasing more or less of a product. This form of measurement helps to classify products as inferior...
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...EGT1: Economics and Global Business Applications Marginal Analysis By Christine Poole April 12, 2013 Abstract This essay will define marginal revenue, marginal cost, and profit, and it will explain the relationship each has with total revenue, total cost, and it will explain the concept of profit maximization. Marginal Revenue Marginal revenue is “The change in total revenue that results from the sale of 1 additional unit of a firm’s product; equal to the change in total revenue divided by the change in the quantity of the product sold.”(McConnell, C. R., & Brue, S. L., Flynn, S. (2012)). Total revenue is the total receipts of a firm from the sales of any given quantity of a product. It can be calculated as the selling price of the firm’s product times the number of items sold. If the total revenue is zero when zero units are sold, then the first unit of output sold increases total revenue by the selling amount, which is also the marginal revenue amount. The demand for the product will determine whether the marginal revenue is higher, lower or the same as the revenue from the previous unit produced. “While marginal revenue can remain constant over a certain level of output, it follows the law of diminishing returns and will eventually slow down, as the output level increases.” www.investopedia.com/terms/m/marginal-revenue-mr.asp. When marginal revenue equals marginal cost competitive firms will stop producing output. Marginal Cost Marginal cost...
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...A. Explain profit maximization from the following approaches: 1. Total revenue to total cost 2. Marginal revenue to marginal cost Profit maximization is when the largest amount of profit is made based on output levels and prices. In the total revenue to total cost approach, profit is maximized when the total revenue exceeds total cost by the greatest amount. The profit maximization is going to be found between the two break even points. The break even points are where the total revenue and total cost are equal to each other, but that only includes the normal profit. Economic profit is found between the break even points and that is also where the greatest distance between total revenue and total cost is found. In the marginal revenue to marginal cost approach, profit is maximized when the two equal each other. This approach shows profit will be made as long as marginal revenue is more than marginal cost, and the profit is maximized once marginal revenue equals marginal cost. When marginal cost exceeds marginal revenue, profit is no longer being made. Profit maximization will only occur if the price of the product is equal to or greater than the average variable cost. If the marginal revenue does not exceed or at least equal the average variable cost, it would make the most sense to shut down production completely. B. Explain the calculation used to determine marginal revenue. 1. Discuss how marginal revenue increases, decreases, or remains constant in the given scenario. Marginal...
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...Course ID: EGT 1 Task 2 Task: Section A When discussing elasticity of demand we discover three major terms. When company A reduces the given unit price and the consumer reacts by purchasing larger quantities, which in turn creates an increased profit margin, we term this elastic meaning the increased demand percentage change in quantity is greater than the change in price percentage. Given the same scenario and consumer purchases increase, but not enough to cause a gain in revenue, instead it creates a loss in revenue, we call this inelastic demand. Unit elasticity can occur from the same scenario when the increase consumption causes revenue to remain the same with no increase or decrease. = The coefficient is what economist use to measure elasticity or inelasticity. Section B Cross elasticity of demand measures the sensitivity of consumer purchases. It shows the effect of price changes to consumer purchases. Example product X has price percentage change, which cause a percentage change in purchase quantity of product Y. = When we talk about cross price elasticity as it pertains to substitute goods, we can use the example of Coke and Pepsi. If the price of Coke is raised 15%, the consumption of Pepsi will go up in reaction. Pepsi would be considered a good substitute. This would be considered a positive cost elasticity for Pepsi because of the increase in sales; meaning that the sales of one product moves is the same direction as the change in price of another. In short...
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...Running head: MAXIMIZING PROFIT WITH MARGINAL ANALYSIS 1 Maximizing Profit with Marginal Analysis Timothy L. Gould Western Governors University MAXIMIZING PROFIT WITH MARGINAL ANALYSIS 2 Abstract In today’s market it is important to not only stay competitive but be able to grow with the market. In order to accomplish this, a company must pay close attention to its total revenue earned versus its total costs incurred. It must maximize its earnings while assuring that the reward is outweighing the cost of pursuing that reward. MAXIMIZING PROFIT WITH MARGINAL ANALYSIS 3 Total revenue to total cost Of course we want to make money. We have also heard the term “it takes money to make money”. This is very true in any institution that manufactures goods that it then resells for a profit. We do not want to spend five dollars of “total cost” to make only 4 dollars of ”total revenue”. Therefore we must evaluate our total costs of producing an item and assure that we make a profit when we sell the item to a customer. We also want to assure we are maximizing our profit by getting the most we can in our market. As a company that produces widgets we will always have certain costs to do business. Electricity, labor, materials and even rent are always present in our expenses. Some costs are going to be present regardless of how many items we make. These costs are considered fixed expenses. Rent...
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...cost you will have a profit but when total cost exceeds total revenue you have a loss. In the graph below you can see at 8 units is where the maximum profit would be. After 8 units are produce you see the effect of diminishing returns as your profit for each unit produced gets smaller and smaller until it hits 15 units and you are now taking a loss for each unit produced. Profit maximization is determined by the greatest gap between TR & TC. Quantity TR TC Profit 0 $0.00 $10.00 ($10.00) 1 $150.00 $30.00 $120.00 2 $290.00 $50.00 $240.00 3 $420.00 $80.00 $340.00 4 $540.00 $120.00 $420.00 5 $650.00 $170.00 $480.00 6 $750.00 $230.00 $520.00 7 $840.00 $300.00 $540.00 8 $920.00 $380.00 $540.00 9 $990.00 $470.00 $520.00 10 $1,050.00 $570.00 $480.00 11 $1,100.00 $680.00 $420.00 12 $1,140.00 $800.00 $340.00 13 $1,170.00 $930.00 $240.00 14 $1,190.00 $1,070.00 $120.00 15 $1,200.00 $1,220.00 ($20.00) Quantity MR MC 0 $0.00 $0.00 1 $150.00 $20.00 2 $140.00 $20.00 3 $130.00 $30.00 4 $120.00 $40.00 5 $110.00 $50.00 6 $100.00 $60.00 7 $90.00 $70.00 8 $80.00 $80.00 9 $70.00 $90.00 10 $60.00 $100.00 11 $50.00 $110.00 12 $40.00 $120.00 13 $30.00 $130.00 14 $20.00 $140.00 15 $10.00 $150.00 When using the marginal cost to marginal revenue to determine maximum profit you would use the formula MR=MC. So when the marginal revenue is equal to marginal cost your profit is at its maximum...
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...Company A has made a decision to expand their company in Japan. Our company is going to face some failures in this market located in Japan. When looking at this we do not want to fail on our first attempt. Of course, this is a risk that will have to be taken. If there is a failure on this first attempt, we will incur a great expense, and not mention the difficulty to attempt a second attempt in that particular market. I feel that the most important problem that we are going to face will be the language barrier. The official language in Japan is Japanese. If the local business chooses to conduct a business in Japan, a fluent interpreter will need to be present at all times. This is another expense for the company. English is a language that is taught in Japan, but it is not the primary language that is spoken there. The Japanese have a tendency to be passive resistance. There are a couple of things that this culture takes very seriously. One would be body language. Silence is something that is more integrated in their culture and customs. Helping to avoid a misunderstanding between you and the Japanese conversationalist you will need to use the Japanese body language along with verbal communication. Eye contact here in the United States is something that we use, that is considered very important. In Japan this is to be considered very rude and also aggressive. I feel that to get buy in Japan we need to make sure that we have just a basic knowledge of their culture...
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...negative coefficient indicates the two products are complementary. A zero or near zero cross elasticity means the products are considered independent. A3.Income Elasticity of Demand is the ratio of the percentage change in the quantity demand of a good to a percentage change in consumer income; it measures the responsiveness of consumer purchases to income changes. A positive coefficient means more of the product is in demand as income rises, they are known as normal goods. A negative coefficient mean purchasing of a product decreases as income rises means the product is an inferior good. B. Explain the elasticity coefficients for each of the three terms defined in part A. B1. Elasticity of Demand. If the coefficient is greater then 1 it is Elastic Demand , if the coefficient B2.Cross Price Elasticity. If the coefficient is negative, less then zero, it is a complimentary good. If the coefficient is positive, greater then zero, it is a substitute good. If the coefficient is zero or near zero it is said to be an independent good. B3. Income Elasticity. If the coefficient is negative, less then zero, it is an...
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...the price elasticity equation and coefficient are used. The coefficient Ed is defined as “the percentage change in quantity demanded of product divided by the percentage change in price of product X” (McConnell, Brue, Flynn, 2012, pg. 76) The three expressions of Ed are Elastic, Inelastic, and Unit Elasticity. Elastic demand occurs “if a specific percentage change in price results in a larger percentage change in quantity demanded” (McConnell, Brue, Flynn, 2012, pg. 77). For a product with inelastic demand Ed < 1. An example of elastic demand is when there is a 2% decrease in the price of chocolate that results in a 6% increase in quantity. Ed= .06/.02 = 3 Inelastic demand occurs “if a specific percentage change in price produces a smaller percentage change in quantity demanded.”(McConnell, Brue, Flynn, 2012, pg. 77) For products with inelastic demand Ed <1. An example of inelastic demand is when there’s a 2% decrease in the price of milk that results in a 1% increase of demand. Ed= .01/.02 = .5 Unit elasticity of demand occurs “where a percentage change in price and the resulting percentage change in quantity demanded are the same” (McConnell, Brue, Flynn, 2012, pg. 77). An example of unit price elasticity occurs when there is a 3% decrease in price of ground beef that results in a 3% increase of demand in ground beef. B) Cross price elasticity is also referred to as “cross elasticity of demand.” Cross price elasticity of demand...
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...INSS 370 Final Exam Study Guide Below is a study guide for your final exam. There will be a combination of true/false and multiple choice questions. 1. Who is responsible for prioritizing the product backlog? 2. What does a burn‐down chart show? 3. What are the principles outlined in the Agile Software Development Manifesto? 4. If our highest priority is to satisfy the customer through early and continuous delivery of valuable software, in general, how can we do that? 5. In agile software processes are the highest priorities to satisfy the customer through early and continuous delivery of valuable software? 6. What traits need to exist among the members of an agile software team? 7. In agile development is it more important to build software that meets the customers' needs today than worry about features that might be needed in the future? 8. The ____ phase of the SDLC includes four main activities: requirements modeling, data and process modeling, object modeling, and consideration of development strategies. 9. One of the main activities in the systems analysis phase is ____ modeling, which involves fact‐finding to describe the current system and identification requirements for the new system. 10. How is planning performed on projects that use Agile approaches? 11. Who should be the main judge of the business value (think of the various roles within an agile team)? 12. How should work be allocated and who should allocate the work to the team in an Agile ...
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...Identifying Good or Bad Statements Anit Maharjan HUMN210-H5WW Meghan Roehll Franklin University 4th April, 2013 a. Nobody in the world today is really good. Yes, I have heard of good people, but not really good people. - Good statement. b. The world is not flat. Well, if you look at a map it is: - in what point of view - bad statement. c. I will need an extended period of laborious cogitation to assimilate the missive. This doesn't make any sense - bad statement. d. The number 2 is odd. Are we talking about an even number? I believe your confusion comes from the fact that 2 is a prime number, but it is still even. It is the only even number that is prime – false statement. e. If you believe in evolution, then your ancestors were filthy apes. There are two kinds of people in the world: - one is god prayer and the next is science believer. If you support the statement from the point of scientific theory of evolution by Darwin, then yes our ancestors are filthy apes, whereas if you think form the side of god’s prayer then the statement is false – good statement. f. Some swans are black. In this statement, I am not sure that some swans are black or not, all swans could be black or white – good statement. g. If you are a human, then you are a person. If you are an individual, then you are alive. Human is a person and of course the person becomes an individual and every individual breaths...
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...អាណាចក្រភ្នំ អាណាចក្រភ្នំ គស 50-630 ទីតាំង * ៣០០លី លិចលីនីយ(ជនជាតិចាម) * ៧០០០លី Jenan(តុងកឹង) * ឈូងសមុទ្រធំមួយ * ទន្លេរធំមួយ លិចនឹងពាយព្យគឺសមុទ្រ * ១លី=៥៧៦ម=១៧២៨គម=> 1. កម្ពុជា 2. កម្ពុជាក្រោម 3. ថៃ(ភាគកណ្តាល) រាជវង្សមាន៖ 1. លីវយី(៥០-៦៨) 2. ហ៊ុនទៀន(៦៨) 3. ហ៊ុនប៉ានហួង៖ដែលជាមេទ័ពបានប្រើល្បិចវាយក្រុងទាំង៧នឹងបានដណ្តើមអំណាចពីព្រះ បាទហ៊ុនទៀន 4. ហ៊ុនប៉ានប៉ាង៖ជាកូនហ៊ុនប៉ានហួង 5. ហ្វាន់ជេម៉ាន់៖ជាអ្នកសំលាប់សោយរាជ្យបន្តរឺក៍ហ៊ុនប៉ានប៉ាងផ្ទេរអំណាចអោយ 6. គិនចេង(២២៥)៖ត្រូវជាកូនរបស់របស់ហ្វាន់ជេម៉ាន់ពីព្រោះគាត់បានស្លាប់ពេលវាយ នៅ គិនស៊ីន 7. ហ្វានឆាន(២២៥-២៤៥)៖បានសំលាប់គិនចេងដើម្បីសោយរាជ្យបន្តដែលត្រូវជាក្មួយហ្វាន់ជេម៉ាន់នឹងត្រូវជាបងប្អូនគិនចេង 8. ហ្វានឆាង(២៤៥-២៥០)៖ជាកូនពៅរបស់ហ្វានជេម៉ាន់បានមកសងសឹកនឹងសោយរាជ្យបន្ត 9. ហ្វានស៊ីយ៉ុន(២៥០-២៨៩)៖បានសំលាប់ហ្វានឆាងសោយរាជ្យបន្ត 10. ធៀនឈូឆានតាន(៣៥៧) 11. កៅណ្ឌិន្យ(៣៥៧)៖គាត់មានកូនពីរគឺស្រីឥន្រ្ទវរ្ម័ននឹងស្រេស្ធវរ្ម័ន 12. កៅណ្ឌិន្យជ័យវរ្ម័ន(៤៤២-៥១៤)៖មានបុត្រាពីរគឺគុណវរ្ម័នជាប្អូននឹងរុទ្រវរ្ម័នជាបងក៍ប៉ុន្តែគុណវរ្ម័នជាអ្នកសោយរាជ្យដែលត្រូវជាកូនកុលប្រភាវតីជាមហេសីរីឯរុទ្រវរ្ម័នជាកូនស្នំ។ដោយមិនសុខចិត្តព្រោះខ្លួនជាបងមិនបានសោយរាជ្យក៍ប្រើល្បិចសំលាប់ប្អូនដើម្បី សោយរាជ្យម្តង។ 13. គុណវរ្ម័ន 14. ចេនឡា ចេនឡា រុទ្រវរ្ម័ន(៥១៤-៥៥៦) គស ៥៥០-៨០២ 15. ឥសីកម្ពុស្វយម្ហូវ៖ 16. ស្រុតវរ្ម័ន៖ 17. ស្រស្ធវរ្ម័ន៖ 18. វីរវរ្ម័ន៖ 19. ភវរ្ម័ន(៩០០-៩២២)៖ * ទីតាំងរបស់ចេនឡានៅត្រង់តំបន់បាសាក់តាមដងទន្លេរមេគង្គដែលច្ចុប្បន្ននៅភាគ អាគ្នេយ៍ប្រទេសឡាវ...
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