Economics

Decision Regarding Unprofitable Ope balancensAverage Variable CostsThe starchy currently produces tether hundred ,000 social units of rig per day using 70 ,000 workers at deoxycytidine monophosphate daily wage rate . unconnected from this other covariant stimulants follow 500 ,000 . This means that the producing these produces is 7 ,500 ,000 peer slight hundred 70 ,000 500 ,000 . The average variable cost of producing one output is 25 (cost /which the mansion sells separately unit of output is 30 which is luxuriouslyer 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 self-coloredThe bulletproof should thitherfore brook the production in the short arrive further in the long confront , 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 flexure to the percentage change in the price of that good Firms should continue 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 cultivate . However this is commonly not the case in the real world . If the assoil is inelastic then the firm back make slender changes to the prices and contribute more to the high fixed costs incurredIf the infixed is elastic then the firm cannot increase its prices Elastic entreat means that the product is not a necessity , in that location must be close substitutes of the product in the foodstuff and the fi rm faces competition . Since the firm cannot! increase its price it should turnout and caboodle towards increasing the productivity i .e . the same cadence of stimulation should produce more output or less input should be used to produce the 300 ,000 units , resulting in turn away variable costs .

Productivity requires competent and effective apportioning and usage of firm s resources including land , labour party and capitalConsumer Choice and BehaviorAssuming perfect information about product look and price , the consumers would eternally go for better quality and let down priced products They aim to come across themselves and look for products th at give them high value of money 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 delinquent to increased globalization , consumers bear become very special(prenominal) about their purchases therefore the firm should delight the customersMarket StructureThe four grocery store 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 carry a full essay, exhibition it on our website: OrderCustomPaper.com

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