One of the most important objectives of any business is profit maximization. The concept aids in the survival of the business, guarantees an increase in the return of its shareholders, and also prevents insolvency from occurring. In order for a business to understand profit maximization it must first comprehend the relationship between marginal revenue and cost. For a company to properly understand marginal revenue and cost, it would have to determine how it is related to total revenue (TR) and
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Managerial Economics Output No. 1 With regard to a hospital, a state university, and a museum, define (a) a possible primary aim, or goal, of each, (b) some of the constraints under which they operate, and (c) the relationship of (a) and (b) to the study of managerial economics. |Name of Firm |Primary Goals |Possible Constraints | | |
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at from an economics perspective in order to run the company efficiently. Consider both the microeconomics and macroeconomics perspectives. The entire business organisations around the globe have one similar goal and that is to increase the profit. By scrutinising the demand of the clients, supplying good quality and suitable supply, the profit can be maximised. Conversely there are various microeconomic and macroeconomic factors that affect this process. These factors significantly affect the
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ECONOMIC PLANNING Planning by Inducements Planning by inducement is often referred to as ‘indicative planning’ or ‘market incentives’. In such type of planning, the market is manipulated through incentives and inducements. Accordingly, in this system there is persuasion rather than compulsion or deliberate enforcement of orders. Here the consumers are free to consume whatsoever they like, producers are free to produce whatsoever they wish. But such freedom of consumption and production are
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Suggested Exercises’ Answers (Please note that these questions are from “Problems and Applications” part of the chapters, which are at the very end of the chapters) CHAPTER 14 Q1. a. Profit is equal to (P – ATC) × Q. Therefore, profit is ($10 – $8) × 100 = $200. b. For firms in perfect competition, marginal revenue and average revenue are equal. Since profit maximization also implies that marginal revenue is equal to marginal cost, marginal cost must be $10. c. Average fixed cost is equal
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1) Easy Living microwaveable foods has had an increase in demand due to the large amount of buyers and sellers in the market. Because of the large numbers of buyers and sellers selling the same product. This market is perfectly competitive. 2) In assignment 1, it was also stated that the market structure competitive and that the equilibrium price was to be determined by setting QD equal to QS. In a perfectly competitive market there are a large number of buyers and sellers. The products sold
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Business Proposal ECO/561 J. Carl Bowman 1/20/14 Victoria Holmes Google Chromecast is just the latest invention to enter into the competitive market of online streaming. It plans on competing with the likes of Apple TV, Hulu Plus, and Netflix. The new product features as an HDMI plug in that is used to plug into any device to access movies and TV shows. Its main competitor was the Belkin Miracast, which happens to offer the same service for a more
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Question 1. How does the theory of the firm provide an integrated framework for the analysis of managerial decision making across the functional areas of business? Discuss. Answer. Contribution of theories of the firm to the concept of the business model The advantage of the Chesbrough and Rosenbloom approach to the business model concept is that its functions or components provide a comprehensive structure by which to analyse different sources of value in firms. Compared for instance with Amit
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Price gouging most likely is a negative term for most people. The reasons are price gouging can be meant as unreasonable and unfair charging comparing to normal at the time when people really need it. In addition, it can be meant that business owner suddenly raising the prices and taking the advantage of the increase demand due to an emergency event. There are many arguments saying price gouging is moral, or amoral. However, if we base on the cause of price gouging, it is not about moral or amoral
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Case 1.2 Opportunity cost and productivity in agriculture Summary This case study shows how the concept of opportunity cost can be applied to calculate a measure of the value of economic activity that incorporates resource costs due to environmental damage from the activity. Suggested answers 1 What is a society’s benefit from higher productivity? Productivity equals the ratio of value of output from a production activity to the value of resources used in doing that activity. Hence
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