...EGT1: Task 1 Total revenue is what a firm profits all together on the sales of a product or service. It is the sum of all the money spent by the consumers on that product or service. Total cost is what it cost the firm to make a product or deliver a service. Total cost includes the purchasing of raw materials, labor, production, transportation, and any other cost incurred by the firm. To gain profit maximization, you have to take total revenue and minus total cost. The point at which the difference is the highest would be the profit maximum. Marginal revenue is the additional profit or revenue that a firm makes by selling one more product or service. In a monopolistic competitive market, the market determines the price of the products or services being sold. Marginal cost is the cost to a firm to produce one more product. It is calculated by taking the total cost of the last product made and subtracting the total cost of the product before that. In the graph, it costs Company A $30 to make one product and $50 to make two products. The marginal cost is $50 minus $30; which is $20. It goes up $10 for every additional product. To figure out marginal revenue, take the total revenue minus the total cost for each product produced. The difference in profit from one unit to the other is the marginal revenue. Marginal revenue increases from making one product up to eight. When the production of a product reaches seven and eight, the profit is at a maximum...
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...EGT1 – Task 1 6/5/14 In this essay I will define terms of economics and explain their relationships. How a profit maximizing firm determines the level of output & the reaction to the level of marginal revenue will also be explained. Profit maximization is the process which determines the price & output level which the most profit will be made. The total revenue – total cost approach is based on the profit equals the revenue minus the total cost. The total revenue is the sum of the company’s sales of the item in question where the total cost is the cost the company pays to produce the product. Marginal Revenue – Marginal cost should also be considered. Marginal revenue is defined as the extra revenue made when one additional product is sold. Where total cost is the cost paid to produce the product, the marginal cost is the cost paid to produce one more unit. As stated above the marginal revenue is the extra revenue made when one additional product is sold. The calculation used to determine this is total revenue divided by total quantity sold. In the scenario provided, the marginal revenue consistently decreases when more are sold, as you can see in the table & graph provided below. Also stated above marginal cost is the cost paid to produce one more unit of product. The calculation used to determine this is total cost divided by total output. In the scenario provided, the marginal cost increases when more are produced as you can see in the table...
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...EGT1 Task 1 Student ID: A1. To achieve profit maximization, we must understand that profit is equal to total revenue (TR) less total cost (TC). Profit maximization occurs once total revenue exceeds total cost. A2. Marginal revenue is the change in total revenue from the sale of one additional unit. Marginal cost is the change in total cost as output changes by one unit. Profit maximization occurs when marginal revenue and marginal cost are equal. B. Marginal revenue is calculated by taking the change in total revenue / the change in quantity. B1. In the given scenario, one must calculate how much Company A made in marginal revenue from each widget by dividing the total revenue received by the quantity of widgets sold. Based on the different output levels in the given scenario, one can determine that marginal revenue will steadily decrease. C. Marginal cost is calculated by taking the change in total cost / the change in quantity. C1. By dividing the total cost of each widget sold by the quantity of widgets sold in the given scenario, one can determine that marginal cost will steadily increase. D. In the given scenario, profit maximization occurs at the quantity of eight. This is the point where a variation in total revenue and total cost is $540. This is also the point where marginal revenue and marginal cost are equal. E. If marginal revenue is greater than marginal cost, it would result in a profit and larger quantities...
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...EGT1: Task 1 Profit maximization is derived from two sources that counteract one another. This dynamic can best be described as total revenue (TR) vs. total cost (TC). Total revenue is quantified as a firm’s total profit intake from sales of a product or service delivered. This is total amount of revenue that was derived from consumer spending. Total cost, however, includes all the purchases of raw materials, labor, production, transportation, distribution or any other cost incurred by this particular firm for this particular product or service. In order to calculate profitization, you must subtract the total cost from the total revenue. The point at which maximum profitization would occur would be when the difference between these two numbers is at it’s positive peak. To define marginal revenue (MR), we must first define marginal cost. Marginal cost (MC) is that additional cost associated with producing this additional product or service to the consumers. It can be calculated by dividing the change in cost by the change in unit production. After calculating marginal cost, if the cost is lower than the current price of the item, there is no need to lower the price of the item to sell more units. In the given illustration, Company A spends $30 to produce one product and $50 to produce two. The marginal cost, in this example, would be $20. It also illustrates that this cost increases $10 for every new product. Marginal revenue is defined as the additional profit...
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...EGT1 Task 1 Marginal Analysis Student Name Western Governors University Student ID: The primary focus of this paper is to demonstrate the concepts of marginal revenue and marginal cost, how the two are related to each other and how they are used by a company in profit maximization. By factoring, analyzing and comparing the various data on revenue and cost, a company can use a marginal analysis to determine the best direction to maximize profits. A marginal analysis is the “comparisons of marginal benefits and marginal costs, usually for decision making” (McConnell, 2011, p. 6). A. There are two methods to describe profit maximization. Further details of both methods and how each are used to determine profit maximization are as followed: 1. One method of understanding profit maximization is by using the relationship of total revenue and total cost. Total revenue is the total income that a company receives from a product or service. The price multiplied by the quantity of the product or service equates to the total revenue. Total cost is the total expense or cost to a company to produce a product or provide a service. Profit is determined by subtracting the total cost from the total revenue. Initially, as production or quantity increases, profit increases as well. There is a point, however, where the profit will maximize and then begin to diminish as the unit quantity increases. This point is where the greatest profit is realized in relation to the total revenue...
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...(A) Total Revenue is what we call the income that comes in from a specific good or product. This income through doesn’t include any of the amount it takes to produce this product. When you are calculating the Total Revenue also known as “TR”, you have to multiple the sale price of the good or product by the quantity that has been sold. The profit maximization happens when the TR from the sales of a good is higher than the “TC” or total cost. Marginal Revenue also known as “MR” is when there is a change in TR, which comes as a result when producing and selling an additional unit of product or good. “MC” which is Marginal Cost is when the change of TC is used to produce another unit of product or good. When there is a change in TR, MR is what happens. To calculate this, you need to take the change in output quantity and divide it by the change in the TR. When the MR equals the MC, Profit Maximization will happen. (B) Marginal Revenue is found by dividing the TC by the change of the output. In most cases when you have a MC of a product or good, the MR will usually be higher and if the MC is greater than the MR, the TR will increase. In the case that your MC is greater than the MR the TR will decrease. The TR will remain the same if the MC and MR are equal. In the scenario that is given MR started at 150.00 and continued a gradual decline as the quantity was increased. When the company got up to the final number 15 units, they were down to only $10.00 in MR. (C)...
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...EGT1 – TASK GUIDE INTRODUCTION: As you work on each of the Tasks please make use of the various resources posted and updated within the Business Undergraduate Economics Learning Community Task 1 Recorded Webinar TASK 1: MARGINAL ANALYSIS This Task centers on the competency of marginal analysis with two structured objectives. First is the requirement to describe the relationship between marginal revenue (MR) and marginal cost (MC) at the point of profit maximization. Second is the requirement to explain the concept of profit maximization. ACTIONS OF APPROACH: 1- Prior to turning in the Task, consider attending a Live Webinar on the Task. Students that attend are much more likely to pass the Task. You can always find an updated schedule of Live Webinars in the Community Pages (link at the top of this document). 2- This essay should be relatively short (1-3 pages) and can be written entirely from the concepts discussed within the McConnell e-text. In preparing for this Task you should read Chapters 7-11 of the McConnell e-text, with specific concentration on the information in Chapters 7 & 8. *Chapter 7 "Business and the Costs of Production" *Chapter 8 "Pure Competition in the Short Run" Chapter 9 "Pure Competition in the Long Run" Chapter 10 "Pure Monopoly" Chapter 11 "Monopolistic Competition and Oligopoly" 3- Formulate your responses to this Task in accordance with an “outline” format. More specifically, when writing your paper – list the Task Element and structure your...
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...EGTI Task 1 Marginal Analysis In order for any business to be successful they would need to know how to make the most profit for the goods they are producing and selling. In this paper I am going to explain some of the key terms that companies need to keep in mind when operating their business. First, we will start with marginal revenue, which is defined simply as the extra revenue that is made for each additional unit of a product that is sold. This is directly related to marginal cost, which is what it costs the company to make that additional unit of product. Next there is total cost and total revenue. Total cost is what the company spends to produce a certain quantity of its product. This includes the cost of all the materials, labor, production, etc. Total revenue is defined as the total amount of money received from producing and selling that given quantity of a product. Total revenue is not to be confused with profit however. Profit comes from subtracting the total cost of units produced from the total revenue made. Simply put: Profit = Total revenue – total cost. In order to determine profit maximization using total revenue to total cost Company A would need to find the optimal output level. For each widget Company A produces both the total cost and total revenue increase. However, if total cost ever exceeds the total revenue the company will begin to lose money. The chart below shows the point at which Company A would reach their profit maximization using...
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...EGT Task 1 A. Demand of a unit is inelastic when the price is one and the increase to price makes the revenue higher. Elastic demand occurs when the price is higher than one and with the fluctuation of prices increase and decreases total revenue will incline or decline. A good example would be when the demand measurement is changed as when a company lowers the price products to boosts or increase sales. B. The cross elasticity of demand measures how sensitive consumer purchases of one product (say, X) are to a change in the price of some other product (say, Y). We calculate the coefficient of cross elasticity of demand Exy just as we do the coefficient of simple price elasticity, except that Cross-price elasticity is a measure of how sensitive consumer purchases of one product are to a change in the price of some other product .Substitute goods are goods that can be used in the place of other goods, like bread and bagels. Complementary goods are goods that are used along with other goods, like coffee and creamer. In other words, they “complement” each other. 3. Income elasticity measures how much a change in a consumer’s income will affect their purchasing habits of normal goods, such as automobiles, groceries, and houses, as well as inferior goods, such as potted meat and bus tickets. Goods whose demand rises when incomes rise but decreases when incomes fall are normal goods. Goods whose demand rises when incomes decrease but decreases when incomes rise are...
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...Supply and Demand One of the most critical concepts in the study of economy and the way our world works is: supply and demand. This essentially helps use understand markets and the way we consume the things we need and want on a daily basis. Supply and demand concepts have application in everyday life and in business. Essentially supply and demand are determined separately, the sellers determine the supply and the buyers determine the demand. The price of the product or service offered is never really fixed until equilibrium is reached. Another words the product or service offered must equal the amount demanded. This concept has a direct impact on consumers in the daily decisions he or she will make. However many variables within supply and demand still exists. With all the variations of products and services offered what makes consumers pick one product or service over another? In the following paragraphs you should have a better understanding of what drives decisions that are vital to the market in an economy. In economics, elasticity is the measurement of how changing one economic variable affects others. Elasticity extends our understanding of markets by letting us know the degree to which changes in price and income affect supply and demand. Sometimes the responses are substantial, other times minimal or even non-existent. But by knowing what to expect, businesses and government can do a better job deciding what to produce, how much to charge, and, surprisingly...
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...Profit is equal to Marginal Revenue less the Marginal Cost. Profit maximization is the point where Marginal Revenue is equal to Marginal Cost. In this method, the company compares the amounts that each additional unit of output would add to total revenue and total cost. B1. To calculate Marginal Revenue, you get the difference in total revenue after a unit is produced and divide it by the change in quantity. In the given scenario, the quantity change is always 1 and the Marginal Revenue only increases when the first unit is produced. The only increase is when 1 unit is produced which yields the Marginal Revenue of 150. The Marginal Revenue decreases by 10 when 2 units are produced all the way to when 15 units are produced. So, when 2 units are produced, the Marginal Revenue is 140, it’s 130 when the 3 units are produced, it’s 120 when the 4 units are produced, and so on. C1. To calculate Marginal Cost, you get the difference in total cost after a unit is produced and divide it by the change in quantity. When 1 unit is produced, the Marginal Cost is 20 and when 2 units are produced, the Marginal Cost stays the same. When 3 units are produced, the Marginal Cost increases to 30 and keeps increasing by 10...
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... characteristics of perfect competition, monopoly, oligopoly, and monopolistic competition. Objective 309.1.3-‐06: Describe how the need for governmental price regulation differs for firms in different competitive environments. Date: February 9, 2015 A) The Anti-‐Trust Laws Sherman Act (1890) The Sherman Act came about due to a growing public resentment of trusts. The antitrust legislation is broken down into two parts: • Section 1 “Every contract, combination in the form of a trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations is declared to be illegal.” Section 2 “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any person or persons, to monopolize any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a felony” (Brue, Flynn, & McConnell, 2012) • Some results of the Sherman Act include the banning of various restraints of trade and monopolization. Another result was that it seemed to set a...
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...A. Identify one country in Eastern Asia (e.g., Japan, China, North Korea, South Korea, Macau, Taiwan, or Mongolia) to be the focus of your essay. I chose Japan as the focus of my essay. In addition to being a lovely country with rich history, Japan is also a hub of business, producing great art, fantastic video games, cars, computers, and other electronics, a few examples among many business avenues that can be found in Japan. There is likely something in everyone's life that has roots in Japan in one way or another. B. Identify major cross-cultural issues that may impact Company A’s marketing approach in this situation. 1. Describe how the issues you identified may impact the approach Company A takes. Bringing two cultures together is a delicate objective. A challenge that is an automatic given is the challenge of communication, with language being the first challenge. It is the most major of cross-cultural issues that may impact Company A's marketing approach in this situation. If one is not fluent in the native language, then a translator is absolutely essential, and it is best to have a translator that is local to the region in which business is to be conducted. Even if one is very fluent in the native language, it's still a good idea to have a translator local to the region to assist with business proceedings. The reason for this is because of a second challenge Company A will encounter in its business endeavor – regional dialect, or lingo. It's not enough...
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...EGT1 – TASK 1 Western Governors University EGT1 Economics and Global Business Applications Element A1 & A2 A1. Total revenue (TR) to total cost (TC) is cost, which is calculated using total revenue minus the total cost, (TR-TC). As each unit is produced, the total cost increases in addition to the total revenue. Yet, at some point in the production of the additional units, the total revenue will exceed the total cost. When it reaches that point, it becomes a loss. The point when profit maximization is the largest is bolded in the table below. |QTY |TR |TC |TR-TC | |0 |$0.00 |$100.00 |-$100.00 | |1 |$131.00 |$190.00 |-$59.00 | |2 |$262.00 |$270.00 |-$8.00 | |3 |$393.00 |$340.00 |$53.00 | |4 |$524.00 |$400.00 |$124.00 | |5 |$655.00 |$470.00 |$185.00 | |6 |$786.00 |$550.00 |$236.00 | |7 |$917.00 |$640.00 |$277.00 | |8 |$1,048.00 |$750.00 |$298.00 | |9 |$1,179.00 |$880.00 |$299.00 | |10 |$1,310.00 |$1,030.00 |$280.00 | A2. Marginal revenue...
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...EGT1: Task 1. When owning or managing a business it’s important to keep track of the marginal revenue. The most important factors in showing you if your business is a success are cost, revenue and profit. Revenue can high for a company, but if the costs are high as well a profit won’t show and they will most likely not be able to make it. It’s important for businesses to keep track of their profits and cost’s. The way businesses figure their profit maximization is by determining the price and the number of widgets made to get the highest profit they can for their business. There are two ways of figuring your highest profits, one of which is by Total Revenue/Total Cost method and the other way is Marginal Revenue/ Marginal Cost method. A1: Looking at Marginal Revenue shows how much profit a business has by selling each extra widget. Marginal Revenue is the change in total revenue coming with a change in quantity of widgets sold. Marginal Revenue is the difference in total revenue minus the difference in quantity. A2: In the Marginal Revenue/Marginal Cost method, for each unit sold the Marginal profit is equal to the Marginal Revenue less the Marginal Cost. Profit maximization is when Marginal Revenue is equal to the Marginal Cost. To show this, a business compares the amounts that each additional unit sold would add to the total revenue and the total cost. B: For Company A to find their Marginal Revenue, they would take the difference in total revenue after a widget is produced...
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