Business costs Assignment Example | Topics and Well Written Essays - 1000 words

Business cost - Assignment ExampleFor example, a firm always prefer to produce each unit of output whos per unit marginal revenue exceeds the marginal cost of the unit. By doing so, the firm would gain more revenue by marketing that unit. On the other hand, if the marginal cost of a unit of output is more than its marginal revenue in that case, the firm avoids producing that unit. If the firm produces such unit, it would scram loss rather than profit on the unit. 2- What do you understand by the term economies of scale? Reductions in per unit cost resulting from increase in market size and increase in firm are called as economies of scale. Any unit cost reduction that occurs when a firm increase its production subaltern or substancely, the market in which that firm is producing its units, increase. Over that period of time globally as well as locally, the firms and the markets are increasing. This increase in twain is mostly contributed by the latest means of technology, which are mostly used nowadays in the process of production. For example, previously much work was carried out manually as a result, a sufficient amount of resources were consumed. Thanks to machinsation and computerisation that have sufficiently added in the process of economies of scale. ... enue- substancely equalling with the total costs- or in total units of production, the cost of produced units offsets the revenue obtained by the sale of units. Some closes may justify a company keep producing units even it is making loss. First, the loss, occurred by the break-even point or near to that point, most of time doesnt last for a considerable period of time. The company may be experiencing a seasonal variation in the demand of a particular unit. As soon as that period of seasonal variation in demand ends, the company again observes profits- revenue stupendous costs. 4- What market military force may large firms enjoy? How and why may a government seek to limit this? Market power is associated with the behaviour of a firm and the way firms affect competitive conditions and prices in a market (Bourdet, 1991). The way a firm adopts its supply of goods and services production mechanism and its aggregate strategy towards its prices determines its market power. For example, if a firm has 70 percent market shares in the sale of a particular commodity. Under this condition, it would not be inconclusive to say that the firm has sufficient market power to affect and control the prices of that commodity. A government via legislation can restrict to limit the market power of the firm. By enacting a particular legislation and implementing it, the government would become in a position to limit the firms market power. The main reason for limiting the market power of the firm is to allow the competitive market conditions. The competitive market conditions benefit producers and the consumers as it would protect consumers who would pay higher costs if the firm limit the requir ed level of commodities in market. 5- Consumer gain as much from small business as from large ones. Analyse