EGT1: Task 1 A) 1. When determining how much of a profit a company will make‚ one has to look at a few deciding factors. Two of those are total revenue and total cost. Total revenue is the sum of a company’s sales of a particular product. Total cost is how much a company pays for production which includes fixed and variable costs. After total cost is deducted from the total revenue‚ the money left over is a profit. The goal of most is to maximize profits the best way possible. Total revenue
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in total revenue by the change in output quantity. 1. Marginal revenue in this situation increases when one (1) widget is sold. After the one (1) widget is sold as the quantity increases the marginal revenue decreases by ten (10). C. Marginal cost is determined by taking the change in total cost and dividing it by the change in quantity. 1. Marginal cost stays constant between widget when the output quantity is one (1) and output quantity is two (2). The marginal cost increases
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The relationship between marginal cost (MC) and marginal revenue (MR) is fairly easy to see‚ marginal cost is the extra cost from the production on one or more units of a particular item verses marginal revenue is the change in total revenue from the sale of one or more units of a particular item. There is a principal that explains the relationship between the two best called the MR=MC rule‚ which states “that a firm will maximize its profit (or minimize its losses) by producing the output at which
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Profit maximization from the total revenue to total cost approach is at the point of the largest difference between total revenue and total cost. Profit maximization from the marginal revenue to marginal cost approach is where marginal revenue equals marginal cost. The calculation used to determine marginal revenue is the change in total revenue divided by the change in quantity. In this scenario‚ marginal revenue decreases by $10 at every additional increment of widget production. The calculation
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EGT 1 Task II A. Elasticity of demand is the consumer’s response to the change in price. The demand of a product varies with the price. There are three categories of elasticity of demand; elastic‚ inelastic and unit elasticity. Elastic demand is one in which the change in quantity the consumer demands is due to the change in price of the product being larger. Inelastic demand is one in which the change in quantity demanded due to a change in price is small. Inelastic demand usual causes
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Task 309.1.1.06 A. Two methods of profit maximization that companies utilize are the total revenue to total cost approach and the marginal revenue to marginal cost approach. To attain their goal of achieving the highest level of profit‚ Company A uses these methods to determine the appropriate output level to achieve their goal. Both methods arrive at the same level. In the first approach‚ Company A first determines its total revenue by multiplying the number of widgets sold by the price
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Regulation 2 Industrial regulation is government imposed regulation of an entire industry in order to monitor prices and products provided to the public. Industrial regulation exists to avoid overpricing‚ lack of competition and the overall taking advantage of consumers. The intended impact on the markets is to promote competition and economic efficiency. Industrial regulation
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EGT 1: Task 2-309.1.2-08 & 09 Elasticity of demand is the relationship between the demands for a product with respect to its price. Generally‚ when the demand for a product is high‚ the price of the product decreases. When demand decreases‚ prices tend to climb. Products that exhibit the characteristics of elasticity of demand are usually cars‚ appliances and other luxury items. Items such as clothing‚ medicine and food are considered to be necessities. Essential items usually possess
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EGT Task A Starting a business is a delicate process that can be easily ruined if the owner doesn’t know how to maximize it profits. In order to make sure the business is obtaining the highest level of return the owner must ensure that he understands the concept of profit maximization. This essay will explain the relationship between marginal costs and revenue to give the firm a better understanding in profit maximization. To better understand how to maximize revenue the firm must first comprehend
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Company A can successfully enter the country of South Korea. South Korea has strong ties to the United States government and has a similar quality of living as the United States there will not be a huge labor cost advantage however‚ there won ’t be a disadvantage. This report however‚ will focus on cultural differences not the business model for entry which should be done with a joint venture with a local company. Major potential cross cultural issues could be the following Language Barriers‚ Foreign
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