Economics for Business Report

This report analyzes the relationship between marginal revenue and average total cost in business economics. It discusses the benefits firms can gain by optimizing pricing strategies and the implications of government policies on economic development. The report concludes that understanding these economic principles is crucial for firms to achieve their objectives and enhance profitability.

Economics For
business
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
BENEFITS FOR FIRM ..................................................................................................................3
COST IMPACT ON FIRM..............................................................................................................5
RECOMMENDATION...................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
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INTRODUCTION
Margin revenue is the additional revenue that can be attain by any firm by producing
extra unit. Marginal revenue of monopolist is always equal to the price of that particular goods.
Recently, government should focuses on level where they reduce total average cost by cutting
demand curve level (Baye, 2010). On this project we study, by cutting demand curve level
provide benefits to the country are discussed in an appropriate manner. Furthermore, it will also
provide information in regard to average total cost curve.
BENEFITS FOR FIRM
Additionally, there are several benefits that any firm receive through application of level
where total average cost curve cut the demand curve. With the help of this benefits, company can
achieved its goals and objectives in a competitive environment by presenting it into the market in
an effective manner. Along with that, there is another benefit for an organisation that is marginal
revenue intersecting the marginal cost (Bold and Vega, 2003). With this company can achieve
their long term opportunities goals by controlling overall cost of a firm that leads to
improvement in customer base. These demand curve allow the firm to set the price of goods and
service at that level where customer or citizens are ready to pay at fair price (Lee, 2014). This
leads to improvement in turnover of a company by increasing in firm's sales for products and
services. In addition to this, various loss and risk that are arise in the firm will also be reduced at
some desired level that help them in attaining goals and objectives of a firm. In order to develop
best and better learning there is only few formulae that help in reduction overall total cost
(Cardoza and Fornés, 2011).
Average Total cost = Total cost/ Quantity
30000/1000= 30, This formulae tells that total cost of a firm is 30,000 and the quantity
of a product is 1000 so the total average cost arise is 30. Let assume that the price of a goods and
services is 100 which said that an organisation face various problems in relation to loss. Lets in
another situation we take price that is assume to be 400 it means that firm overall margin of
profit becomes advanced. But in that situation company suffer loss in long term when it increase
price of a product it will reduce demand of a product in future.(Ceccherini-Nelli and Priebe,
2007). Lets take an example. A firm offer service that is 400 pounds and the total average cost is
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300. It can be said that a firm set its pricing at that level where customer not able to pay at that
price. In that situation, customer shift towards another firm who offer best or low price than 400
pounds . It shows that company get benefits of that level where the demand curve cuts the overall
average cost only in long time period. Additionally, it firm set price at 300 pound this means that
there is a minimizing the risk of loss. It reduce the risk of loss only when there is average cost is
300 which is equal to price. This leads that the demand curve goes into upward direction for long
time that directly help them in achievement firm's goals and objectives (Dowling, 2009). This
will encourage the firm to contribute to the country so there is an economic development and it
also help them to make sure that profit of margin can be achieved in advanced in an effective
manner. It not only advance profit margin but it also increase the sales of a company that leads to
increase in the level of success of a firm. Business firm improve its operational effectiveness
only when they have an effective consideration of level where the demand curve cut the total
average cost curve. It also help them by protecting from instant fluctuation happen and it also
help in meeting needs (Hoover, 2009).
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To understand the subject of evaluation of curve in a better and significant manner. With
support of that, various key elements of an efficient economic development can be allow and
understand in an appropriate manner. With the help of graph, we can see that Average total cost
curve is higher than the demand curve it means it give negative impact to a business firm. It is
same for the level of scale if it is lower than the total average cost it also effect negatively as well
(Guner, Ventura and Xu, 2008). However, the price and the marginal cost of a product is at the
same level this will increase the demand of the product in a market. This shows that firm get
benefits in relation to better competition in the competitive market that help them in attaining
firm's goals and objectives in an effective manner. Moreover, the demand curve also give
direction with an aid of decision regarding cost that can be reduced in relation to production cost.
This will also help them in achieving goals and objectives by minimizing risk of production cost
in an appropriate manner(Gustafsson, Johnson and Roos, 2005). Marginal cost can be influence
only in an desired manner if, the average total cost is above than the demand curve. To control
the cost in an efficient manner a firm have to focus on key areas where cost can be controlled by.
In total cost it includes fixed cost, these cost cannot be changed with the change in a variable
cost and output that are needed in the production. Fixed cost can be vary only when there is any
change in the output level (Jabnoun, 2009). Lets taken an example, if a firm have a business of
producing desktop and Electronic equipments it means that firm produce only variable cost. On
the other hand, firm produce fixed cost of equipment's that is used in the production of goods.
This means that fixed cost deliver increase capacity of productivity that will directly help in
achieve goals and objectives in an appropriate manner.
COST IMPACT ON FIRM
Additionally, the application of pricing at that level where the demand curve help them in
cut the total Average cost curve give a positive aspect on overall cost of a firm. This will also
give positive impact on decision making process leads to has a positive effect on total cost. With
help of this, firm's objectives and goals can be achieved by controlling overall firm's cost in an
appropriate manner (Jorgenson, and Stiroh, 2006). Along with this, It allow the firm to set out
the pricing so it help them in achieving objectives and goals with the help demand curve that cuts
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the total average cost. If the marginal cost is equal to the price according to the
competitive ;prospect it means firm can achieved its objectives in a desired manner.
ATC= TC/Q,
30000/100= 300, it can be explain that the the total cost is 30,000 and whereas, quantity
of product is 100. In that situation the production cost is higher than the price. This means that it
increase the loss that will generating issue of financial. This will highly impact on the overall
cost of a firm in a desired manner. Along with that,it can be said that the overall cost of a firm is
almost same as a scale only when the pricing is equal to the total average cost that is 300. In that
situation, the overall cost of production can be handled by an organisation (Lee, 2014). Better
division of resources helps in taking advantages in a suitable manner. While the patent give an
impact, the business earn profit by manufacturing at there when the MR=MC and Price = MC.
As many business entering into a market, demand curve become elastic that is faced by an
organisation, until when the marginal revenue is equal to the price(Lusardi and Mitchelli, 2007).
Moreover, with the help of curve it can be said that cost of production decision can be
improved by a firm. Cost of risk can be minimising leads to help in attaining objectives in an
effective manner. It will effect the marginal cost level in an appropriate manner if the average
total cost is above the level. This can be improve with help of focusing on key areas where the
cost can be handle in an effective manner.
RECOMMENDATION
It can be said that the government take initiatives on sustainable improvement by focussing on
overall improvement. They can transformed various policies and standards according to the
needs of a firm. Along with this, It can be suggest that adaptability to the organisation that give
facility to set the pricing according to their needs and demands of a customer. It will also help in
enhancing the profit margin ratio of a all business that help them in attaining goals and objectives
in a suitable manner. It has been said it is a method that change in the standards that allow to
change the policies of a company. In addition to this, government should protect the interest of
firm's customers by regulating monopolies. While designing policies and standards they should
involve both customer and companies that will also help them in accomplishing firm's goals and
objectives in a desired manner.
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In addition to this, government should regulating the taxation policies that will also
improve the monopoly of an organisation. Along with that, a firm can make change in taxation
policies that will also help them in achievement in goals and objectives in an effective manner.
Government can control and regulate its taxation policies so that they can charge high ratio of
profit it can be only if a firm is not favourable the belief of government. There are various taxed
that is commodity taxes such as sales tax and excise duty. Excise duty are that which can be
levied on manufacturing whereas sales can be on selling of product in another state. There are
various component that can be taken into considered as critical component that lead to achieved
the objectives of a firms in an effective manner. In Addition to this, the enforcement of equally
monthly installments taxes that is paid by firm is also a critical component that are mention by
the government effectively in order to secure various issues. It will take initiatives to control on
activities and also conform that this control above pricing are also taken into consideration.
Moreover, marginal cost is an key component that can also be improved and mention effectively
so that directly leads to achieve company's goals and objectives in an appropriate manner.
Government should also control price regulation so they can control in an effective which can be
taken into consideration above monopoly of a firm.
CONCLUSION
In the project report, we conclude that marginal revenue is always equal to the price of a
product. Along with that, marginal revenue help in earn extra revenue to a firm by producing
additional units of output. In that situation firm get several benefit from monopolist marginal
revenue by producing extra unit and attain firm's objectives in an appropriate manner. It can be
possible if the demand curve cuts the total average cost curve. With the help of this, firm should
present in a market in an effective manner so they can achieve objectives and goals successfully.
It also allow the firm to set their price according to its comfort zone and it also help in contribute
to the economic development in an efficient and effective manner. This leads to earn profit
margin for a long time period. Along with that, It has a great impact on firm's cost due to
application of pricing at that level where the demand curve cuts the total average cost. It will also
have a positive impact on decision in relation to cost. With the help of that, total cost of a firm
can be control lead to increase the firm sales and generate revenue in short time periods that
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leads to attain goals and objectives. Firm also attain their objectives and goals when it equal the
cost and price of a goods in an effective manner in a competitive world.
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REFERENCES
Books and Journals
Baye, M., 2010. Managerial economics & business strategy. Boston: Irwin/McGraw-Hill.
Bold, F.X. and Vega, C., 2003. Micro E ects of Macro Announcements: Real-Time Priceff
Discovery in Foreign Exchange. American Economic Review. 93. pp. 38–62.
Cardoza, G. and Fornés, G., 2011. International co-operation of Ibero-American countries in
business administration and economics research: Presence in high-impact journals.
European Business Review. 23(1). pp.7-22.
Ceccherini-Nelli, A. and Priebe, S., 2007. Economic factors – an analysis of historical trends.
International Journal of Social Economics. 34(11). pp.788 – 810
Dowling, E., 2009. Schaum's Outline of Mathematical Methods for Business and Economics.
McGraw Hill Professional.
Galliers, R. D. and Leidner, D. E. (Eds.). 2014. Strategic information management: challenges
and strategies in managing information systems. Routledge.
Hoover, S., 2009. BERA: Business and Economics Research Advisor. Reference Reviews. 23(5).
pp.27 – 28.
Lee, N., 2014. What holds back high-growth firms? Evidence from UK SMEs.Small Business
Economics.43(1). pp.183-195.
Guner, N., Ventura, G., and Xu, Y., 2008. Macroeconomic implications of size-dependent
policies. Review of Economic Dynamics. 11(4). pp 721-744.
Gustafsson, A., Johnson, M. D. and Roos, I., 2005. The effects of customer satisfaction,
relationship commitment dimensions, and triggers on customer retention. Journal of
marketing. 69(4). pp 210-218.
Jabnoun, N., 2009. Economic and cultural factors affecting university excellence. Quality
Assurance in Education. 17(4). pp.416 – 429.
Jorgenson, D., Ho, M., and Stiroh, K., 2006. Potential growth of the US economy: will the
productivity resurgence continue?. Business Economics. 41(1). pp 7-16.
Lee, N., 2014. What holds back high-growth firms? Evidence from UK SMEs.Small Business
Economics.43(1). pp.183-195.
Lusardi, A. and Mitchelli, O., 2007. Financial literacy and retirement preparedness: Evidence
and implications for financial education. Business economics. 42(1). pp 35-44.
Online
Dale, V., 2010. What is Economics and Business Economics. [Online]. Available through: <
http://www.ru.nl/economics/@776702/pagina/ >. [Accessed on 23 December 2016].
Dunn, P., 2012. Use and Users of Financial Statements [Pdf]. Available through:
<http://www.bookkeepers.org.uk/out/?dlid=54362>. [Accessed on 23 December 2016].
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