HND Accounting
Economics
FINAL REPORT:
The Economics of Business
DUE DATE: 20 May 2015
Catherine Macintosh
11006620
For the attention of Sarah Sutherland
Word count: 1,243 (Excluding Acknowledgements, Abstract/Executive Summary, Terms of Reference, References & Appendices
TABLE OF CONTENTS Page
1.0 Costs 3
1.1 Total costs 3
1.2 Average costs 3
1.3 Marginal costs 4
2.0 Games Console Market 4
2.1 Oligopoly 4
2.2 Oligopoly market structure 4
2.3 Companies behaviour under oligopoly conditions 5
3.0 An Alternative Market
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Costs ATC
AVC
AFC
Minimum level Productivity
In the short run, the average total cost will decrease initially as Sony begins manufacturing their new controller, due to the modification in the amount of total product increasing for each following unit of variable input. This will continue until reaching the minimum level and will then start to increase. This is due to the modification in the amount of total product decreasing for each following unit of variable input and as the number of employee’s increase the amount of total product for each additional employee will decrease more than the amount of total product for the previous employee. This begins altering the marginal cost so consequently the average variable and total cost.
1.3 Marginal Costs
Marginal costs are the amount that the total cost will alter for Sony by manufacturing one additional unit of productivity. Marginal costs are generated by variable costs only. The law of diminishing infers that Sony’s marginal cost will increase as productivity increases. Sony’s increasing
For both scenarios, the firm’s output price and average variable cost are the same. The difference lies in the average total cost. Because the total fixed cost is significantly higher, the average total cost is also significantly higher. It would be highly recommended that the firm shut down if total fixed costs are equal to 3,000,000. In the first scenario, the firm is also losing money. We would recommend laying off ten percent of the staff (5000 employees) to account for the $400,000 loss. However, it is important to note, employee productivity must be increased to 4.44 in order to maintain the 200,000 units per day. This would allow the firm to operate in a break even state.
Apple Incorporation is one of the biggest high technology company that operates worldwide. Is was established on April 1, 1976 in California by Steve Wozniak, Steve Jobs and Ronald Wayne.The company is known for designing and manufacturing several technology devices include Smart Phones (iPhone), Tablets, iPods, iPads, Mac, Apple TV, Apple watches as known as smart watches, it also produce software’s like the OS X and iOS operating systems, and offers several online services such as iCloud, Apple Pay, Apple Care. The company strategy is to designee and enhances its own operating systems, software, hardware and other services by providing customers with new developed technology.
A corporate business enterprise is established under a specific legal framework where laws governing the operations and functioning of the enterprise are outlined. The activities of the enterprise are monitored and therefore such an enterprise is recognized by law. This is important due to the fact that legal suits can be filed by the enterprise within the provisions of the law.
1. Describe two examples of important things that financial planning skills can help you do, and explain why these things are important to you personally. (4-6 sentences. 2.0 points)
Despite the city’s positive response to the coffee shop’s renovation, other businesses in the area have not followed suit in renovating the many decrepit buildings and abandoned lots. How might the presence of an externality be in part the cause of this?
net operating income will tend to move up and down in response to changes in levels of production.
The Marginal Cost graph intersects the Average Total Cost graph and the Average Variable Cost graphs at their minimum points. As long as the cost of producing one additional unit remains less than average total cost, the average total cost continues to fall. When marginal cost finally exceeds average total cost, average total cost begins to rise in response. The same effect applies to the relationship between marginal cost and average variable cost.
12) Suppose a firm has $1500 in variable costs and $500 in fixed costs when it produces 500
From each total variable cost, we have average variable cost (AVC) = Total variable cost divided by number of outputs
In comparison, the marginal cost is the added cost of producing one more unit of output. It is determined by the change in total cost (TC) divided by the change in output (Q). MC= TC/Q. In the provided scenario, for Company A to produce one widget TC=$30, to produce two widgets TC=$50 thus the marginal cost was $20; furthermore the cost per widget to produce was $25. Marginal cost will continue to decrease for Company A until they reach their profit maximization of $42.86 per widget at 7 widgets. Marginal cost will then begin to decrease for every additional widget produced until the end result of 15 widgets with a MC that exceeds $80, also allowing TC to topple to TR ($1220/15=$81.33).
* Marginal Cost – The opportunity cost that arises from an increase in that activity
3 Answer A A tax can be used to ensure that those who generate harmful effects pay for them rather than third parties. 4 Answer B Public goods cannot be left to market forces as they are non-rival and non-excludable. A and C refer to merit goods and D to demerit goods. 5 Answer B More training, if in appropriate areas, should enable workers to move more easily from declining to expanding industries. A would help to reduce geographical immobility. C and D would be likely to increase demand and employment. 6 Answer B The socially optimum output is where MSB equals MSC, at point W. To achieve this output costs need to rise to incorporate external cost. The marginal external cost at W is represented by the gap between MSC and MPC.
This assignment has a maximum total of 100 marks and is worth 10% of your total grade for this course. You should complete it after completing your course work for Units 1 through 5. Answer each question clearly and concisely.