Objectives of Firms Introduction to Business Objectives Standard theory assumes that businesses have sufficient information‚ market power and (importantly) motivation to set prices for their products that maximise profits This assumption is now heavily criticised by economists who have studied the organisation and objectives of modern-day corporations. Not only do most businesses frequently move away from pure profit-seeking behaviour‚ many are organised and operated in a way where profit is not the
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QUIZ 2 Post Graduate Programme in Management (Section ‘E’) 2009-10 Time 1 hour Instructions Total Marks 40 1. Exam is closed book 2. All questions in Part A and in Part B
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The consequences of competition for the pricing and output decisions of firms are most easily established in the model of pure competition‚1 which requires that 1. Potential buyers and sellers are numerous and each is so small relative to the market that individual decisions about purchases or output do not noticeably affect market demand or supply‚ nor‚ consequently‚ do individual decisions affect the market price. 2. Firms in the industry produce a homogeneous (standardized)
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STUDY GUIDE COSTS OF PRODUCTION: Total Physical Product (TP)- total output or quantity produced Marginal Product (MP)- the additional output generated by additional inputs (workers). Average Product (AP)- the output per unit of input. Stage 1: Increasing Marginal Returns Stage 2: Decreasing Marginal Returns Stage 3: Negative Marginal Returns TC- Total Costs: Sum of Fixed and Variable Costs VC- Variable Costs: Costs for variable resources that do change with the amount produced
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Assignment 4 Case 7.2 Revenue Recognition Associated with Frequent Flier Miles Continental Airlines: Revenue is deferred and recognized when transportation is provided • Revenue is realized‚ and earned. The carrier has performed its duty‚ the service has been preformed. The amount of the claim is known AMR (American): Revenue is deferred and recognized over the period approximating mileage credits are used • Because there is no actual way of knowing when/if mileage will be used‚ it is not
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BEA111 Online Quizzes 1-6 Quiz 1 1. Economics is best defined as the study of how A. prices and quantities of goods and services are determined in markets B. private firms and households respond to taxes and subsidies C. people make choices in the presence of scarcity and the results of those choices. D. interest rates and exchange rates are determined 2. The scarcity principle implies that A. people will never be satisfied with what they have B. as wealth increases
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Question no: 01:- Accounting profit and Economic profit. Economic Profit Implicit cost Accounting profit Explicit cost Total opportunity cost Revenue Revenue How an economist views a firm How an accountant views a firm Accounting profit equals sales revenue minus ( - ) all costs except the cost of equity capital‚ while Economic profit is sales revenue minus ( - ) all costs including the opportunity cost of equity capital. Thus economic profit may be lower than the accounting profit
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Pricing Strategy Group Coursework Pricing Simulation: Universal Car MBA Students | * | Date | 26 May 2013 | 1. Situation Analysis (Pre- game) Before starting the simulation game we have analysed the available data based on the metrics below: * Market Conditions * Prices * Costs 1.1 Market Overview Market Size & Fleet Allocation Comparing the 3 cities‚ we have identified Orlando as the biggest market followed by Miami with Tampa being the smallest
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Average Product” as “Average output per employee.” MP has to do with the extra output produced by the last person that was hired. Q (L‚K) = a + bL + cL2 +dL3 only labor is in the SR production formula. Q (L‚K) = a + bKL + cK2L2 +dK3L3 (Both labor and capital are in LR formula.) TFC =Total Capital Costs = rK Here “r” represents the “capital costs over the specified time period for 1-unit of capital K.” TC = wL + rK‚ w = wage rate paid to each laborer (per time period)‚L = number of units of labor
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External factors that affect pricing decisions * External Factors - There are a number of influencing factors which are not controlled by the company but will impact pricing decisions. Understanding these factors requires the marketer conduct research to monitor what is happening in each market the company serves since the effect of these factors can vary by market. i) The nature of the market and demand ii) Elasticity of demand iii) Competitor’s cost‚ price and offers
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