Marginal Cost College Essays Samples For Students

There are 2 main approaches on profit maximization problem:

- Total revenue to total cost
- Marginal revenue to marginal cost
- Total revenue to total cost.

According to this approach total profit (TP) is equal to total revenue (TR) minus total cost (TC).

TP = TR – TC.

TR and TC are functions of quantity (Q).

TR = f (Q) and TC = f (q).

In this case we look for a value of Q which outputs maximal value of P.

- Marginal revenue to marginal cost
It is an alternative perspective that relies on marginal profit value (MP) which is equal to marginal revenue (MR) minus marginal cost (MC).
MP = MR – MC
If MR is greater than MC at some value of quantity MP is greater than 0. This means that we will receive profit from the next produced item so we need to produce a greater ...

As a manager, I would continue with operations despite the short run loss. This is because keeping on with operations would enable our firm to reach its long term objectives instead of losing the entire business due to the short term losses (Arnold, 2008). The state of the product is that it is homogeneous. For the hypothetical numbers, the price is $ 10 while the quantity of the product is 1,000 units. The fixed costs are $ 4,000 while total costs are $ 11,000. In order to figure out the total revenue, the product quantity will be multiplied by the ...

Weighted Marginal Cost of Capital

Weighted Marginal Cost of Capital is the cost of the last new dollar of capital raised by the firm. As a firm raises more and more capital, the costs of different sources of financing will increase. For instance, if a firm raises additional debt, the cost of debt will rise because of additional financial risk associated with debt financing. WMCC is calculated as follows:
WMCC: Weight of Debt* Cost of Debt(1- Tax Rate) + Weight of Equity* Cost of Equity
For instance, if the company has already issued a bond and existing bond covenants prohibits the company from issuing new ...

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Problem 1
Opportunity Cost
- Define the term “Opportunity Cost”
Opportunity cost is the value of the foregone mutually exclusive alternatives. When choice are to be made between several mutually exclusive alternatives in terms of decision making, opportunity cost is the value of alternative that is forgone due to selection of some other alternatives. Generally, opportunity cost is the value of next best alternative that can be achieved with same input. For example: George had $2 in his pocket which is enough to buy either a cup of tea or a cup of coffee. Among ...

Introduction:

Marginal cost refers to the extra cost incurred by a firm due to an increase in output by one unit. The marginal cost curve, therefore, is a graphical representation used to show the increase in costs incurred by a firm with each successive increase of a unit of output. The marginal cost curve of a firm can take several shapes such as; a rounded check mark, a flat line or an upwardly sloped line (Baumol& Blinder, 2011).

The rounded check mark marginal cost curve:

Any firm that portrays an initial decline in marginal costs with an increase in output up to some point from which any increase in output results, in increasing marginal ...

Externalities take place when consumers/manufacturers activities have an unintentional or indirect impact on other consumers/manufacturers without affecting prices. According to Sankar, externalities may cause positive and negative effects (6). In other words, if the consumer or a group grants certain benefits to other economic agents, the externality is positive; if any activity is disadvantageous to other groups or individuals, then the externality is negative (7). According to Stiglitz (216), “Externalities arise whenever an individual or firm undertakes an action that has an effect on other individual or firm”. The externalities phenomenon tends to have a spillover effect in the ...

A. Define marginal revenue. Explain its relationship with total revenue.

Marginal revenue can be defined as an increase in revenue that is produced by the sale of one output unit. It can be calculated as a ratio of the change in total revenue to the change in the total output. In the perfectly competitive market marginal revenue is equal to the selling price. In the monopolistic market, however, as supply is controlled by only one company, demand curve is usually above the marginal revenue curve, thus allowing the company to charge higher prices and gain additional revenues.

B. Define marginal cost. Explain its relationship with total cost.

Marginal cost is the cost that is incurred in the production of one ...

Question 1:

(a) Suppose the income elasticity of demand for furniture is 3 and the income elasticity for doctors' services is 0.3. Compare the impact on furniture and doctors services of a recession that reduced consumer incomes by 10 per cent. (2 marks)

Change in income = 10% = 0.1

Income elasticity of demand = change in quantity demanded/ change in income

Therefore: change in quantity demanded = Income elasticity of demand × change in income

Impact of recession on furniture:

Change in quantity demanded = 3 × 0.1= 0.3 = 30%

A change of 10% in consumer income will result in a 30% change in quantity demanded of furniture.

Impact of ...

Abstract

Market structure refers to the interaction between various buyers and sellers. Different market structures have different characteristics. The characteristics of the market structure determine the realized outcomes. There are three main market structure: perfect competition, oligopoly, and monopoly. Perfect competition has many sellers. Therefore, they do not have any market power. They cannot influence market outcomes. An oligopoly has few firms with some market power. They can influence the outcomes. Monopoly comprises of only one firm with absolute market power. Therefore, it can influence the realized outcomes. This paper highlights the characteristics of the various market structures. It then ...

Industrial Organization

Industrial organization refers to how the markets and industries are organized. In this case, the workings of such markets and/or industries are studied, particularly the way the firms in such industries compete with each other. Industrial organization is widely considered as a subject of microeconomics. However, it is imperative to consider it as a separate entity since it tends to emphasize on the study of strategies that firms utilize as a characteristic of interactions in the market. Such market interactions include product positioning, competition in pricing, research and innovation, advertisements, among many other factors. Further, it is important to note that industrial ...

Marginal Analysis

Managers, business owners as well as aspiring entrepreneurs should know the most appropriate business form or organization to adopt basing on the various considerations such as liability, taxes, profit sharing, capital contributions, asset ownership and losses, survivorship, management and control. These are the factors that determine whether a business organization becomes successful or fails.

Marginal revenue is the resultant increase in total revenue when an additional unit of output is sold. Marginal revenue can be found by calculating the quotient of the total change in revenue and the total change in the quantity of output. Therefore, we use total revenue ...

Question 1

Analyze the relationship between the marginal cost of capital and foreign investment analysis.
Marginal cost of capital is the cost connected to raising an additional unit of capital. The marginal cost of capital depends on the type of capital that will be used and the associated risks. Marginal cost of capital is important in foreign investment analysis because it is used to determine foreign projects that are to be undertaken and those that are to be rejected. A foreign project can only be accepted if its rate of return is greater than the marginal cost of capital. It ...

According to Name, the labor market “is the institution by which workers and employers come together to engage in the production of output” (Name 297). A distinctive feature of the labor market is fixed level of wages and its correlation with a number of working hours. Key issues of the labor market are health-related issues, issues related to labor supply, and the ones related to total compensation. Health-related issues state that healthy worker is more productive than workers with health problems. Labor supply issues determine a correlation between the health status of the worker and his or her employment. ...

1. Plan for the assessment of Market structure Effectiveness for Operations of the Company.
It can be easily asserted that the performance of the company as well as the market scenario changes whenever there are changes in the demand for a certain product over a period of time. It was observed that there is increasing trend in demand for microwave category. With the pressure and increase in complexity of individual lives and their living standards, the attitude and perception of people towards microwave food seems to be favorable. Such microwave food is also increasingly demanded as a result of ...

1. Plan for the assessment of Market structure Effectiveness for Operations of the Company.
When there is a fluctuation in the demand for a certain product from one year to the other, we should understand that market and Company performance are changing. There can be observed a decent increasing trend for the products in the microwave category. The complexity of individual lives is increasing and as a result, the perception towards microwave food items is favorable. The savings in time and the wide range of choices could be taken as the main reasons for these types of goods selection. ...

Introduction

The pricing strategy should be an integral part of decisions in the marketing position, and it should depend on the overall development strategy of the business and marketing plans. Therefore, companies should not set one price but a pricing structure that should reflect on the variations in geographical demand, costs, the timing of purchase, requirement of market segments, order levels, the frequency of delivery, and service of contracts.

Why different pricing strategies are appropriate in some circumstances

Pricing is an important managerial decision, and most firms do not encounter pricing decisions in major ways on daily operations (Weygandt, Kimmel and Kieso, 2009, pp.59). However, there is a need ...

Microeconomics

Answer 7)
Allocative Efficiency:
This is an economic efficiency where the producers try to satisfy the maximum want of the consumers. In other words, when the society achieves optimal distribution of goods and services, taking into account the preferences of the consumer, it is said to be allocative efficient. In the economic literature, it is defined as an economic state where the price of the product equals its marginal cost as at this point the price which the consumers are willing to pay is equivalent to the marginal utility they get from the product. Below is the ...

Margin means the edge. Marginal changes are small changes to an existing plan of action (Karscig). Marginal cost and marginal benefit are economic principles based on which rational people make decisions. This means that people do not look at total costs and total benefits derived while making an economic decision; rather they take into account the increases/decreases in cost/benefit with purchase of every unit. Thus, people make decisions by comparing costs and benefits at margins (Karscig). The process of decision making with marginal changes explains Mankiw’s principle that rational people think at margins (Stoner). Assuming that there is a ‘ ...

The Canadian healthcare and social assistance sector falls under the NAICS classification. The sector entails a publicly funded healthcare system. The sector is guided by the provisions of the Canada Health Act of 1984 (Belchetz). The sector, relative to its peers in most other countries including the U.S and Mexico, is unique. Its uniqueness arises from the fact that despite being predominantly publicly funded, most of the healthcare services at the point of sale are provided for by private practitioners.
The Canadian healthcare and social assistance sector has been billed in many quarters as a model to be followed ...

According to the modern market trend, the microwavable foods offered by brands such as Healthy Choice and Lean Cuisine have become a convenient option and an easy diet solution for busy people. These microwavable foods are easy to prepare and consume for the people having hectic lives. Thus, there are two growing competitors for this industry of low-calorie frozen, microwavable food. These two competitors have several common factors in their products such as product types and variety, nutritional level and price margin. However, according to the recent financials, Lean Cuisine and Healthy Choice, it had faced a significant drop ...

In the prevoius cases, we analysed about the pricing and various output for the low calorie frozen microwavable food company. Now, in this paper we will be analyzing about various plans that the manager of this food company can follow. The various pricing strategies shall be adopted by the manager to make their products responsive towards the price change. The impact of various government policies on the product and employement needs to be accessed. In the summary, this paper will access various strategies that managers needs to undertake to mark the substantial impact on the market and access the ...

Oligopoly is a market structure in which only few firms are having control over market supply and since there are high barriers of entry and exit from the oligopoly market, the existing firms enjoy the monopoly kind position.( Parkin, 2011) Following are some of the salient features of Oligopoly Market:
1. Interdependence:
Firms operating under oligopoly are interdependent in the decision making process. The reason for the same is that the number of firms operating and competing in the market are very few and any change in price or output level by one firm will have a direct influence ...

Abstract
The trade off theory advocates that the management consider the trade off between the benefits resulting from tax shields verses costs, such as bankruptcy costs, interest costs and agency costs among others. The ability of management to obtain external financing is determined by size of company, profitability, opportunities for growth among other factors. The trade off theory indicates that the management gears at obtaining all the benefits associated with external financing. The M and M theory (1963) has the argument that changing the capital structure may not make the share holder any better off. The contradiction of ...

The Impact of the Guaranteed Price Policy on the European Sugar Market

Sugar industry is one of the most dynamic in the structure of the food industry and plays a significant role in the economies of several countries. The European Union leads the five largest importers of sugar. Sugar production in the EU is expected to grow by 10% in the 2017/18 season. The production may reach 18.3 million tons, but still will be lower than the record 2014/15 season (19.4 million tons). Sugar production growth is expected in France (up to 5.5 million tons) and the UK (up to 1.4 million tons). However, despite the increase in production, the EU ...

A free market economic system is a method of allocating resources, which is based on the market price. Prices are determined through unrestricted competition between the state and privately owned business entities

Command system works best when there are extreme market imperfections and uncontrolled monopolies

A command system works badly when the government control most of the resources and discourage fair competition because it leads to inequalities and poor quality of goods and services.
The contest method of resource allocation works efficiently because increased competition ensures fair prices of goods and services. Additionally, the wage rates are high and the quality of products and services improve as various market players strive to ...

Out of the many options that today’s generation want easy is the food options. And this easy option is provided by frozen meals of the microwave like Lean Cuisine and Healthy Choice. They also offer favorable solutions of diet for current generation people who are busy. As a result of the growing demand, the competition is also growing and there are two major competitors in the low-calorie, microwavable frozen segment of food industry. There are a number of common factors between both the Companies like the type of product, the value of nutrition, and the price. Another similarity ...

There is no doubt that the issue concerning the effects of minimum wages on employment has a subject of debate in many debates and equally generating varied interpretations in many economic debates (König, and Möller 716). This paper discusses the economic arguments for and against the minimum wage and incorporates graphs of the labour market showing the impact of a minimum wage in monopsonistic and perfect competition markets. Whereas proponents of minimum wage argue that minimum wage enhances worker commitment, encourages equality in income distribution, aids in reduction of worker exploitation, and reduces government’s expenditure on welfare; opponents ...

Cost & Profit

1. Give a brief summary of economic costs (i.e. how are they different from accounting costs). In the short-run, why might a firm still operate even when there is a loss.

Accounting cost is the explicit monetary value of resources, which have been used in performing a particular activity. It is the historical cost, which is usually reflected in the accounting statements. Accounting costs are very useful in evaluating past performance of a company and in comparing companies within an industry. However, accounting costs are not sufficient for strategic decision-making, since they do not take into consideration the cost of the alternative solutions, which ...

Introduction

Knowing the market is very important for a firm as it has to base its policies and profit maximizing decisions based on the market characteristics. In a perfectly competitive market the firms follow the price determines by the industry. On the other hand a monopolist sets the price and quantity based on the profit maximizing conditions. The monopolist earns higher profit than the firm under a competitive sitation. In a monopolistic competition the firms have to innovate so that the products can be differentiated from the products of the consumer. The oligopoly form of market is characterized by the ...

The Washington Post article entitled, “Rich Californians balk at limits: ‘We’re not all equal when it comes to water”, written by Rob Kuznia discusses the ongoing drought and the response of certain Californians to the drought. The article perfectly exemplifies economic issues such as scarcity, elasticity, maximizing behavior, and government regulations on goods.
California is in the midst of a historic drought, and many residents of the wealthy community of Rancho Santa Fe feel that if you can afford to pay for more water, you should be able to. This goes a fundamental question of economics; how a scarce good ...

Mathematical Modeling

In an analysis of the economic condition of both enterprises and the larger subject of the national economy applies dismemberment problem or situation into smaller questions. This allows the procedure to the study of the logic which is a simulation. In particular, this method is applicable to the social processes that, among others, form the socio- economic system. Thus, we are able to understand the factors that determine the social conscience and the state of the productive forces, the institutional framework of the society. Modeling of social processes is an important part of mathematical methods in economics that highlight the ...

INTRODUCTION:

The clothing industry is the most emerging market in today’s world. It has a great potential to grow and prosper. The business presented in the report is a clothing business, named “Xyra’s Clothing." The report has presented the financials of the business to propose the investment idea to its potential investors. Xyra’s clothing is a start-up business, in which initial investment is made by four partners. Each partner has made equal investment of $50,000 which accumulated to $200,000 in total as an initial investment. The business has not dealt on credit basis from the start; hence it ...

PART 1

Question 1
If the price elasticity of demand for firm X’s product is -1.75, lowering its price will result in an increase in total revenue. This is because a negative price elasticity of demand implies an inverse relationship between price and quantity demanded. It indicates that an increase in price leads to a decline in quantity demanded and a decline in price leads to an increase in quantity demanded. In addition, the price elasticity of demand is more than 1 in absolute terms hence a change in price leads to a more than proportionate change in quantity demanded. A 1% decrease in ...

INTRODUCTION:

The question which I would like to explore through this assignment is that why there is high trend of unmarried parents in United States and should it continue or not? According to a survey the percentage of unmarried parents witnessed around 83% increase (Jayson). There have been different debates and arguments regarding the causes and implications of this rising trend of unmarried parents. However, in this assignment I will like to explore the economic reasoning and theory behind this decision.

Different sociologists are relating this decision of being unmarried parents to the recent economic crisis (Jayson). It is being perceived ...

There are several characteristics that mainly define the pure competition market structure and distinguish it from the three other imperfect markets. In microeconomics studies, the purely competitive market structure stands out to represent the ideal market competition in which efficient allocation of resources is consummated. There are typically five underlying assumptions that explain the workings of the perfectly competitive market, and these are:
- Firms sell a homogeneous product;
- There are a large number of small firms and no single firm is dominant;
- Firms are price takers;
- There are no barriers to entry and ...

Analysis

A monopoly is when a single business or other organization has complete command and control over a market. It does not mean that they are the only competitor in play. However, it does mean that the single organization in question is not in any way threatened or competed with given the conditions of the market in question. Generally, monopolies are illegal. This is due to the Sherman Anti-Trust Act that was passed in 1890. That law can be used as a means to break up companies that are seen as monopolies. Precisely this was done with Standard Oil Company ...

What are the determinants of the Deadweight Loss?

Introduction
The deadweight problem happens when the government through an attempt to increase their earnings from the goods in a country increases the taxation on them. It happens when they impose a certain amount of tax on certain commodities in the market and the end consumer as well as the producer in charge of the production process forced to lose the whole or part of their surplus. The loss they both suffer is the deadweight loss. The government has the right to earn some form of income from the trade activities within their borders. However, they also need to ...

Externality takes place when action of one agent exerts direct impact on welfare of other agent, and this impact is not transferred by market prices. When there are externalities in the market, the social marginal cost is not equal to private marginal cost. Positive externalities compel market to produce less than the socially desirable quantity (Gans, King & Mankiw, 2011). Positive externalities are present in the economy when marginal social benefits are greater than marginal private benefits (Cypher, 2014). There are, however, several examples of economic activities that pave the way to production of positive externalities such as:

Provision of Education

Industrial training ...

Two of the top companies in the low-calorie frozen, microwavable food industry

In modern life, people are becoming busier, thus, they spend very little time for traditional cooking. Due to growing demand for convenient food and thanks to the development of advanced technology, microwave becomes a useful and common tool in kitchen which helps people to save a lot of cooking time and effort as well as preserve the taste of food. The prevalent use of microwave in every household leads to the growing need for microwavable food. For this reason, many low-calorie frozen, microwavable food companies are found to provide high quality food with convenient way of cooking . At the ...

Assignment 2: Operations Decision

Assignment 2: Operations Decision
IntroductionCurrently, the options for microwave foods with low calorie have widened in the market. As the income of the people has gone up, the consumers can now have higher affordability towards an easy way of living; thus allowing for a change in the traditional rigorous ways of cooking used in yesteryears. Microwaves have now somewhat replaced the cooking methods used traditionally. As the popularity of microwaves has increased, the use of food items related to the same has also enhanced. Since there is such wide variety available for products, there can be an easy target ...

Micro Economics

Q1.The demand of labor is said to be derived demand. What is the meaning of derived demand? How does this concept help to determine the demand of labor?
Ans. A firm demands an input in order to produce a commodity demanded by consumers. So, the demand for an input is a Derived demand. If the input is labor then the demand for labor is derived demand as firms employ them in the production process which contributes to their revenue and profits .The demand for labor is determined form the principle of profit maximization. The demand for additional amount of ...

Introduction

The market structure in which a firm operates determines the strategies that the firm should follow to maintain steady growth in revenue and profit. The market structure influences the pricing decision and also the decision to innovate and diversify in the product. The sales promotion activities are also a great deal dependent upon the market structure in which the firm is operating. To know the market structure we have to understand the degree of competition existing in the market. If there are a large number of firms producing similar products and none of the firms have the power to ...

About the paper

In the words of eminent economist, A.A. Cournot, ‘’ The term market structure refers to the nature and degree of competition in the market for goods and services’’, and this paper is commissioned to discuss various forms of market structure, Perfectly Competitive, Monopoly, Monopolistic and Oligopoly, and how their varied characteristics affect the life of an average consumer and the society as a whole.

Perfectly Competitive Market

In the words of A. Koutsoyiannis’’ Perfect competition is a market structure characterised by a complete absence of rivalry among the individual firms.”

Below discussed in detail are the multiple characteristics of perfectly competitive market:

i) Number and nature of sellers
A perfectly competitive market structure is characterized by large number ...

INTRODUCTION

In this information age, the digital revolution has transformed the industry to an information based economy. Since the late 1970s, the day to day evolution of technology has shaped the modern society by introducing globalized communication. The UK mobile phone network industry is developing day by day by introducing the new-tech systems in the market. O2, Vodafone, EE, T-Mobile, and Orange are the biggest mobile phone network providers in the UK (Rushton, 2012). This report has presented a thorough economic analysis of mobile phone network industry in the UK, considering the biggest network providers in the country.

ANALYSIS OF MOBILE PHONE OPERATORS IN UK

Mobile Phone Network ...

INTRODUCTION

In order to come up with effective and efficient strategies, it is important to understand the dynamics of different market structures. Different market structures have different characteristics and features and operate differently. In this report, an attempt has been made to understand the different market structures and comments have been made on the different features and characteristics of these market structures.

MARKET STRUCTURE

A market is a group of individuals, firms and economic agents, who have interaction with each other as a buyer and seller. In economics market structures are defined into four main types, and that are perfect competition, monopolistic competition, monopoly, ...

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Essay 1

The Diamond-Water Paradox first appeared in Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations (30) to illustrate the irony of value as seen by consumers and traders. It since became a classic analogical centerpiece among subsequent economists to explain their respective theories of value. This essay gives a snapshot of Smith’s original description of the paradox, followed by David Ricardo and Eugen von Bohm-Bawerk.

Adam Smith’s ‘Paradox of Value

So goes the ‘Diamond-Water Paradox’: “Nothing is more useful than water; but will purchase scarce anything; scarce anything can be had for ...

Introduction

Airline companies charge different prices for different classes of passengers. A passenger who wishes to have higher quality services during the flight must pay a higher price for their tickets than those who travel in a different class. The airlines differentiate the prices of customers by having different features in the categories. However, there are other instances when the customers’ ability to travel in the business class is limited by their level of income. Pricing is one of the strategies used in maximizing revenues for the airline companies. The companies, therefore, must take into account the factors that affect demand for ...

- Housing costs me nothing.
This statement is not correct from the microeconomic point of view. There is always an opportunity cost, which is always born by the person who asks the question. Sale of the house or rent of the flat while moving into a cheaper housing would provide quantification of such cost when compared to actual level of income. Also, there are maintenance costs and tax related costs.
- Boring lessons.
The financial cost of the lessons was already covered, from the microeconomic point of view, if the lessons are useless, participation will only increase ...

Introduction

The heart of every economic theory is some kind of modeling. Models provide a logical and abstract stencil to comprehend a complex phenomenon, and they help the economists in many ways. For example, model makes it possible to isolate logically and sort out complex cycles of cause and effect relations that interact in the economy. The four basic market models are one of the prominent tools in economics. They are; pure competition, monopolistic competition, oligopoly and monopoly. Each of the market models has its own characteristics; depending on the nature of the product and the firm, the company can decide to ...

It has been proved by economic theory that perfect competition is the best effective structure to maximize society’s benefits (Consumer Surplus + Producer Surplus). In a perfect competition (price equals marginal cost, MC=P), when there are no entrance barriers and no producer is able to influence the pricing levels, the equilibrium point is on the intersection of the supply and demand curve. Monopolistic firms, however, are able to influence pricing levels, as they have no competitors and maintain high market share. The equilibrium point in monopolistic markets is on the intersection of marginal cost and marginal revenue curves (MR=MC). This ...

Among the four competitive market structures, monopoly occupies the other end of the competition spectrum, in stark contrast with the structure and behavior of industries under perfectly competitive conditions. Monopoly is typically characterized by high industry concentration where there are many buyers but with only one seller, very high barriers to entry and exit, and bounded rationality in the face of absence of perfect or sufficient knowledge. The strongest argument against monopolies may have been voiced by Adam Smith (Church and Ware, 2000) and reinforced in U.S. Anti-Trust Laws (USDOJ, 2008) when they favored more competition than less because ...

Monopoly market is market which has many buyers but one seller. Therefore, the seller can either decide the price to sell or quantity to sell in the market. The seller does not face any competition in short run and long run because there are barriers of entry and exit which prevent new firms from entering the market. This enables monopoly to earn supernormal profit in both short run and long run.
The market demand curve is the same as that of the monopoly because the firm forms the market. Therefore, the average revenue curve which is negatively sloping ...

Buy one get one half off is one of the marketing strategies that is used by companies that produce goods in large quantities. This is because the pricing encourages the customers to buy more goods so that they can benefit from the discount. In return, this ensures that the goods produced by a company are sold within a short duration. The prices are set such that the company benefits at the end even though one item is sold at a lower price. The goods promoted in such a manner are such that its costs less to produce more items as compared to producing ...

Introduction

In any economy, operation of any firm is triggered by competitive atmosphere in which firms needs to operate. Their operation is exposed to various factors such as production of goods, cost of goods, marketing, cost of logistics and existing number of competitors etc. Market is a place where existing number of buyers and sellers determine the price of goods. The prices of goods vary depending upon the demand and availability of goods. In economics, type of market structure depends upon mainly three elements as suggested by economists:

Existing number of sellers and size of their company

Conditions of entry to the market. Market is easily accessible or not
...

(REF TO EXCEL DOCUMENT ATTACHED FOR COMPUTATION)

In order to ensure maximum returns to a company, a management accountant must ensure that goods are produced at the lowest cost possible so as to increase the margin of profit attributable to each product.Companys are however faced with the problem of deciding what particular products can be profitably produced in house, and those that should be sourced from outside suppliers given the given cost requirements of each product.
In deciding the proper mix of the products that should either be produced or sourced from outside suppliers, a management accountant has to determine the ...

Question 3

Maximizing profits for the benefit of the shareholder is the fundamental philosophy to all profit driven businesses. However, most of the return strategies appear to contrast with the actual corporate behavior. This is so the case especially in corporations where the directors tend to seek personal achievements first. The executives, in a bid to satisfy their personal goals overlook, of forget the main goal, profit maximization for the shareholders. One thing to note is that profit maximization and wealth maximization are two different things. Profit maximization is about making more profits by increasing the price of the stock[ CITATION Fra07 \ ...