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Managerial economics - Assignment

   

Added on  2019-12-28

20 Pages6509 Words140 Views
MANAGEMENT ECONOMIC

Table of ContentsINTRODUCTION ..........................................................................................................................3PART A...........................................................................................................................................31. Analyse the predicted changes in the sales..............................................................................32. Effect of change in quantity demanded on price.....................................................................43. Meaning and the importance of income elasticity...................................................................74. Calculation of different microeconomics components............................................................85. Profit-maximization in TSG..................................................................................................106. Maximisation of profit and cost minimization 11PART B..........................................................................................................................................12Brief history of the company ....................................................................................................12Market structure.........................................................................................................................13CONCLUSION..............................................................................................................................16REFERENCES..............................................................................................................................182

INTRODUCTION Managerial economics is highly concerned with the application of knowledge and conceptswhich in turn helps in making suitable decisions. The rationale behind this is that the businessunit can gain a competitive edge over others only when it develops highly competent andsuitable framework. Pricing and output decisions of the firm are highly influenced by the marketstructure in which it operates. In this regard, economic concepts provide a high level ofassistance to the firm in achieving the goals and objectives. The present report is based ondifferent case situations which will develop understanding the aspects of marginal costing.Through this, the business unit can assess the combination of output through which the cost levelcan be minimised. Further, it will also shed light on various market structures and theircharacteristics. Hence, it will describe the manner in which market structure helps in settingsuitable prices for products and services offered. PART A1. Analyse the predicted changes in the salesThe TSG pharmacy deals in providing medicine by manufacturing antibiotics toovercome the diseases. These products are manufactured in the assistance of a qualified doctorwho achieved the degree of pharmacists. The major concern of TSG is to sell their currentproduct by raising the existing level of demand in the market to increase its sales and the revenue(Almaraz and Serrano, 2016). The primary concern of the top management of TSG is to controlits cost by framing strategies to minimise the overall cost. By minimising the cost in the existingbusiness of TSG, it will enhance the sales level which in turn will increase the level of profit.There are different approaches followed by the management of TSG pharmaceutical who willforecast their sales. The forecasting is an essential tool used by an enterprise of TSG to predictthe future sales and the revenue to know the level of cash flows.The economics is a study of social science which is highly concerned with the estimation ofdifferent factors of the production. The current concept emphasises on different streams such asproduction, distribution of resources and consumption of services offered by an entity. Theextinguishing concept is further divided into different segments such as micro and macroeconomics. The focus of TSG pharmacy stresses on the microeconomics approach by utilising3

the market forces (Molina-Azorin, 2016). The demand and the supply of products are assessedproperly to ascertain the real changes taking place in the business about the external market. Themicroeconomics has increased the concept of existing business entity by enhancing the saleslevel in relation to the external market demand of all the products.Sales Elasticity= % change in sales/% change in populationThis particular measure of elasticity of sales will form relationship among two variablessales and changes in the population. The changes in population will affect the sales of TSGpharmacy as the prediction of sales gets better over the years. The current approach will be usedto determine the upward or downward position in the level of sales currently generated by thebusiness.The current scenario has presented a situation of identifying the future sales level byusing the elasticity of sales measure to comment upon the existing level of the firm.Elasticity of sales= Percentage change in sales/Percentage change in the population1.= Percentage change in sales/ (140000-130000)/130000*100Percentage change in sales= 0.8*7.69% change in sale= 6.15%The results of the above analysis have shown that the increase in the current level ofpopulation has increased the sales level. The level of current sales has increased which showcasethe ability of an entity. It has been assumed that the TSG Pharmaceutical will produce its salesby 6.15% in the future. The current focus of the firm is on meeting the needs and expectations ofall the customers by gaining their satisfaction and loyalty.2. Effect of change in quantity demanded on priceDemand and supply are regarded as the major forces of the external market which affect theinternal business environment (Molina-Azorin, 2016). The economics concept has given greaterimportance to the demand and supply of a product which further create trouble in thedevelopment of the prices of products. The product is that weapon used by an entity which willbe covered with a blanket of pricing to please the variety of users. The Current business scenarioof TSG Pharmaceutical is focused on establishing a new image in the eyes of its existingcustomers and other potential buyers by launching new caplets in the market. The launching ofthe current products is to be monitored by assessing its accuracy by using the important4

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