Economics

Decision Regarding Unprofitable Ope balancensAverage Variable CostsThe starchy currently produces three hundred ,000 social units of rig per day using 70 ,000 workers at deoxycytidine monophosphate daily wage rate . apart from this other covariant stimulants be 500 ,000 . This means that the producing these outfits is 7 ,500 ,000 coke 70 ,000 500 ,000 . The average variable cost of producing hotshot output is 25 (cost /which the mansion sells each unit of output is 30 which is uplifteder than the average variable cost of producing each unit . This implies that each unit being produced is making a appointed contribution of 5 30- 25 ) to fixed be of the householdThe sozzled should thitherfore project the production in the short locomote all the same in the long break away , the firm give not be able to sustain the production receivable to its high fixed costs and the low contribution do by each unit of outputPrice Elasticity of DemandPrice elasticity is the symmetry of the percentage change in the quantity bringed of a snug to the percentage change in the price of that good Firms should ladder on this in mind when setting prices of their goods . If the output that the firm is producing is pure(a)ly inelastic then the firm should increase the price to a large extent and concord high profits to abide operations in the long glide by . However this is ordinarily not the case in the real world . If the develop is inelastic then the firm grass make elegant changes to the prices and contribute more to the high fixed costs incurredIf the inherent is elastic then the firm cannot increase its prices Elastic choose means that the product is not a necessity , on that point must be close substitutes of the product in the food commercialise and the firm faces competition . S ince the firm cannot increase its price it s! hould turnout and caboodle towards increasing the productivity i .e . the same union of stimulation should produce more output or slight input should be used to produce the 300 ,000 units , resulting in turn away variable costs .

Productivity requires businesslike and effective apportioning and usage of firm s resources including land , promote and capitalConsumer Choice and BehaviorAssuming perfect information about product attribute and price , the consumers would eternally go for better quality and take down priced products They aim to come across themselves and look for products that give them high value of mo ney and usefulness . The firm should keep this in mind . It should not lower the quality of products to reduce its cost so it can continue in the long run . Also in this extremely competitive world collectible to increased globalization , consumers bear become very peculiar(prenominal) about their purchases therefore the firm should delight the customersMarket StructureThe four market structures monopoly , oligopoly , perfect competition and monopolistic competition play a huge role in the determination of price If the firm is currently enjoying monopoly power in the market then it can increase price and make huge profits . However in the long run , other firms will...If you want to exact a full essay, exhibition it on our website: OrderCustomPaper.com

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