Week Two Team Reflection

Louis Blackshear, LaQthia Cooks, Jennifer DeWitt, Lisa Mariella, Tharthur Myers

Economics ECO/561 Version 7

Ron Merchant

September 10, 2012

Week Two Team Reflection Simplicity is achieved and true knowledge of business practices are obtained through the rigors of understanding terms and concepts such as: production levels, cost maximization, fixed and variable costs, opportunity costs, revenue and total costs curves, etc. These terms not only provide a basis for business operation, they also provide a competitive edge for the determined entrepreneur who seeks to understand the anatomy of business and its language. In hindsight, week two discussed many of the terms above and allowed team members to expand on experiences in both their personal and professional lives. Identify production level to maximize profits. Maximum profit is achieved when the greatest level of economic profit is obtained given the existing conditions of the market. This process involves the adjustment of the level of production in reaction to current market prices (Encyconoic, 2012). Explain how to balance fixed and variable costs. This objective is one that all of team “B” struggled with as the text doesn’t see to give a clear indication of exactly how to balance fixed and variable costs. All that could be extracted from the text as well as from online was that in the short run one should try and turn fixed cost into variable cost in order to create a low operating leverage (McConnell, Rue, & Flynn, 2009).
Apply economic cost concepts in making business decisions. One of the simplest economic concepts that team “B” used was the concept of opportunity cost. For example, when opportunity costs involve money for example, an employee may decide to switch departments. The switch comes with $15,000 more a year but a slightly altered work