Eco 550
Introduction For this assignment, General Motors is the automobile company that will be reviewed and researched in detail. In the year 1908 William Durant, who was already known as a leader in this industry for horse drawn vehicles, founded General Motors. "At its inception GM held only the Buick Motor Company, but in a matter of years would acquire more than 20 companies including Oldsmobile, Cadillac, and Oakland, today known as Pontiac" (General Motors, 2012). In this paper GM 's income statement will be reviewed to figure out the following calculations: the number of cars sold each quarter, the elasticities, marginal cost, variable cost, and fixed costs. After figuring out these calculations, there will be a clear answer to what the future options are for General Motors if they decide to expand.
Using the revenue figures from the income statement and the prices per car calculate the number of cars sold each quarter. This yields a demand curve. There is not sufficient information to construct a supple curve. When looking at GM 's income statement and reviewing the revenue figures for the past four quarters you can use the prices of the vehicles to calculate the number of cars that GM sold per quarter. The prices per vehicle are as follows (from right to left): $20,000, $24,000, $32,000, and $36,000; and the revenue figures over the past four quarters for GM are as follows (from right to left): $36,719,000,000, $37,990,000,000, $37,759,000,000, and $37,614,000,000. To calculate the number of cars that GM sold per quarter you take the quarter 's revenue and divide it by the price per car the calculations are as follows: Sep 30, 2011 (revenue) $36,719,000,000/$20,000 (car price) equals 1835950, Dec 31, 2011 (revenue) $37,990,000,000/$24,000 (car price) equals 1582916.67, Mar 31,2012 (revenue) $37,759,000,000/$32,000 (car price) equals 1179968.75, and June 30, 2012 (revenue) $37,614,000,000/$36,000 equals 1044833.33. The reason that we use the revenue
Using the revenue figures from the income statement and the prices per car calculate the number of cars sold each quarter. This yields a demand curve. There is not sufficient information to construct a supple curve. When looking at GM 's income statement and reviewing the revenue figures for the past four quarters you can use the prices of the vehicles to calculate the number of cars that GM sold per quarter. The prices per vehicle are as follows (from right to left): $20,000, $24,000, $32,000, and $36,000; and the revenue figures over the past four quarters for GM are as follows (from right to left): $36,719,000,000, $37,990,000,000, $37,759,000,000, and $37,614,000,000. To calculate the number of cars that GM sold per quarter you take the quarter 's revenue and divide it by the price per car the calculations are as follows: Sep 30, 2011 (revenue) $36,719,000,000/$20,000 (car price) equals 1835950, Dec 31, 2011 (revenue) $37,990,000,000/$24,000 (car price) equals 1582916.67, Mar 31,2012 (revenue) $37,759,000,000/$32,000 (car price) equals 1179968.75, and June 30, 2012 (revenue) $37,614,000,000/$36,000 equals 1044833.33. The reason that we use the revenue
References: Demand Curve. (2012). Encyclopedia Britannica, Inc. Retrieved September 9, 2012, from Dictionary.com. Dr. Jake, Mitchell: Alan Price (2003). Economics: Principles in Action. Upper Saddle River. New Jersey 07458: Pearson Prentice Hall Finance. (2012). General Motors. Retrieved September 6, 2012, from http://finance.yahoo.com/q/is?s=GM General Motors, History & Heritage (2012). Retrieved September 9, 2012, from http://www.gm.com/company/historyAndHeritage/creation.html Investopedia. (2012). Retrieved September 9, 2012, from http://www.investopedia.com/#axzz260O2gZhP InvestingAnswers. (2012). Variable Costs. Retrieved September 9, 2012, from http://www.investinganswers.com/financial-dictionary/economics/variable-costs-804 Marginal Cost. The American Heritage New Dictionary of Cultural Literacy, Third Edition, Houghton Mifflin Company, 2005. Retrieved September 9, 2012, from http://dictionary.reference.com/browse/marginal%20cost Money Terms. (2005). Marginal Cost. Retrieved September 9, 2012, from http://moneyterms.co.uk/marginal-cost/ Small business chron. (2012). Internal Rate of Return. Retrieved September 9, 2012, from http://smallbusiness.chron.com/