Free Essays on Marginal Cost to Get Inspired & Learn by Example

Explain the Significance of This Concept in Economics?

Allocative efficiency is a type of economic efficiency when manufacturer produces the service or product which is in high demand and desirable, society needs this product and ready to pay for it in the quantity they desire. Economy can be productively efficient but produce the goods in no need for people, it is called allocative inefficiency. Allocative efficiency is reached if a goods or service’s marginal benefit is equal to its Marginal Cost (i.e. Price = Marginal Cost). It is the point where supply (Marginal Cost) and demand (Marginal Benefit) curves cross each other. It is the point at Continue reading...

Merit and Demerit Goods

Merit goods refer to goods, which the society considers to be so valuable that it is imperative for everyone to have them, for instance, education (Mendoza, 2011, p. 278). An example of a merit good in the United Kingdom is education. The UK government provides merit goods for the benefit of the entire society because they would be under-provided if left to private enterprise or the market forces. Merit goods have two essential characteristics: their value is not commonly fully appreciated during consumption, and their use results in positive effects on other consumers.

Graph of merit good

The graph shows that the marginal Continue reading...

Part 1

Introduction.
Based on the current economic situation and the desired quality, the production cost is estimated as; direct material= $15 and direct labor = $5. The unit production cost is:

Part 2:

If the fixed costs are $7500; the cost function for our headphones is;
Cx=20x+$7500

Where x is the number of headphones produced.

With a budget of $ 150,000, the number of headphones that I can produce is calculated as follows;
$150,000=20x+$7500 = 150,000-750020 = 7125 headphones.

Part 3

If the price-demand equation is x= 9600-30p. The revenue function R(x) = unit price × quantity sold = xp
But x= 9600-30p thus the revenue function is;
Rx=9600-30pp
=9600p-30p2
Profit function P( Continue reading...

Introduction

In a truly competitive market, manufacturers and providers of other goods and services are price-takers. That is, there is no incentive rationale why a provider should “price below the marketplace” or even to price above others. Similarly, in a competitive market, the price of the good is “determined by the market supply and the market demand” for it (Baye, 2010). Since competitive markets are considered here, there is also a correlation between what consumers are willing to pay (also known as “price makers”) and how much labor is needed by a producer to meet the needs for this demand Continue reading...

Financial markets and institutions

Introduction
In economics, there is one assumption which is considered when analysing markets. This is the assumption that the market has perfect information. However, this is not always the case. Most markets do not have perfect information because it is impossible for consumers to have all information regarding transactions. Since perfect information is not possible in real world, economists have other means of studying markets with imperfect information. This study is known as information asymmetry. Information asymmetry arises when one person has less information concerning a transaction. The study of information asymmetry gives rise to “market for lemons” where Continue reading...

A general requirement for an emerging company is to determine the factors that would affect the economy of their goods and services. As part of developing a company, it has been decided that the company that I am supposed to design would specialize in manufacturing liquor. To be more specific, the company would specialize in manufacturing bottles of wine.
The production cost of wine was determined by conducting informal research. The informal research was performed primarily through the internet. According to Wine-Searcher (2014), farmers on average sell their bottles of wine to retailers for about $19. Thus, to proceed Continue reading...

Assignment 2: Operations decisions

The price elasticity of demand calculated in assignment 1 indicates that the industry for flow-calorie frozen food is a competitive market. The price elasticity was more than 1 showing that a change in price of the food causes a significant change in quantity demanded. The value implies that firms in the market do not have much power to the prices for their commodities. The competitors of the firm include Nestle SA, Kellogg Company, Birds Eye Foods, among other companies. The high price elasticity enables businesses in the market to use pricing strategies in order to attract and maintain customers. Continue reading...

Problem 1:

Q1. The cost of the four ovens is a fixed cost. The addition of more employees does not change the cost of the ovens. The cost of the ovens is $1000. The cost of the workers is a variable cost because it is determined by the number of workers that are available in a given period. Each worker is paid $500 per week, but the pizza shop employs different numbers of workers.
There is an increasing rate of return from the range of 0-5 employees that are hired by the pizza shop. There is a diminishing rate of return Continue reading...

1
“Government waste is the opinion that the government does not spend money in an acceptable manner” (“Government Waste”). Not all collected taxes are used to fund important for people programs, critical infrastructure like roads, schools, bridges etc. Sometimes the objects of government financing are not chosen wisely. Here is the list of the most outrageous spending projects:
$856,000 to train three mountain lions to run on a treadmill in order to measure the energy consumption of the cats’ hunting techniques. (Nitti)
 $473,000 to house 100 chimpanzees in a room with 100 typewriters for the entire year Continue reading...

A monopoly is a market structure dominated by only one supplier who supplies a particular product or service which does not have substitutes (Mankiw, pg 330). Monopolies exist because there is restriction of entry into a particular market. The existence of monopoly leads to market failure in an economy. Monopoly power means the ability to set prices by a monopoly firm. Entry into the market is restricted because of the high initial costs involved, complexity of operation, the nature of the product or service, economies of scale and existence of patents, trademarks, copy rights and franchise. The existence of Continue reading...