maneco Flashcards
The additional cost incurred by producing and selling one more unit.
MARGINAL COST (MC)
Setting a single price for a single product of a single firm is
“monopoly” model of pricing
- This refers to lower cost of producing two or more products jointly.
If the cost of producing two products jointly is less than the cost of producing those two products separately-
ECONOMIES OF SCOPE
|Ed| =1 the demand curve
unitary elastic
THE PROCESS OF DETERMINING THE PRESENT VALUE OF THE AMOUNT TO BE RECEIVED IN THE FUTURE.
DISCOUNTING
Supply curves describe the behavior of a group of sellers and tell how much you will be sold at a given price.
The supply curve is like a demand curve; we arrange sellers by the prices at which they are willing to sell. Every person willing to sell at or below the given price “supplies” product to the market.
SHIFTS IN SUPPLY
Additional revenue gained from selling one more unit.
MARGINAL REVENUE (MR)
USES TO KNOW THE FUTURE VALUE OF A PRESENT AMOUNT.
compounding
Used to determine the volume required to offset a change in price. It can even tell you how many unit sales that you can lose before a price increase become unprofitable. When combined with information about elasticity of demand, the analysis will give you a quick answer to the changing of price makes sense.
STAY-EVEN ANALYSIS
types of economies of scale
technical
specialization
bulk buying
marketing
risk bearing
container principle
financial
external
Movement along the demand curve.
SHIFTS IN DEMAND
The Quantity Being Produced goes up. Through marginal cost, the manufacturer can determine how to allocate resources among the production units and maximize output.
Increasing Marginal Cost
something that affects demand that a company cannot control.
Income, weather, interest rates, and prices of substitute and complementary products owned by other companies.
Uncontrollable Factor
|Ed| <1 the demand curve
inelastic
THE PRICE AT WHICH QUANTITY SUPPLIED EQUALS QUANTITY DEMANDED
MARKET EQUILIBRIUM
what the producer or seller receives, and is what a consumer or buyer is willing to pay for a unit of a goods or service
Price
Tells how much a single consumer or a group of consumers will consume as a function of a price. It shows the relationship between the price and the number of purchases made by this group of consumers
AGGREGATE OR MARKET DEMAND CURVE
demand measures the change in demand arising from changes in income.
INCOME ELASTICITY
the higher the price,
the higher the quantity supplied.
Supply curves slope upward
Is a method to set the price of the goods or services based on the cost. Under this, we add a percentage of the total cost to the cost itself to get the selling price of the product.
COST-BASED PRICING(or mark-up pricing)
characteristic of many processes. As you produce more, you learn from the experience, and this experience helps you produce future units at a lower cost. Learning carves mean that current production lowers future costs, which has important strategic consequences.
LEARNING CURVES
An investment in a particular area increases, the rate of profit for the investment, after a certain point, cannot continue to increase if other variables remain constant.
LAW OF DIMINISHING RETURNS
Consumers demand ( purchase ) more as the price falls
FIRST LAW OF DEMAND
something that affects demand that a company can control.
Price, advertising, warranties, product quality,distribution speed, service quality, and prices of substitute or complementary products also owned by the company.
Controllable Factor
made using break-even prices rather than quantities
Shut –down decisions
you are vulnerable to post-investment hold-up
you incur sunk costs
about the producers who make and sell, also states that a higher price leads to a higher quantity supplied, and that a lower price leads to lower quantity supplied.
law of supply
describes buyer behavior
MARKET DEMAND
The total number of units that will be purchased by a group of consumers at a given price
AGGREGATE DEMAND
average avoidable cost per unit
break-even price
measures how sensitive the demand of a product is over a shift of a corresponding product price.
CROSS-PRICE ELASTICITY
If the price of one product increases, the demand for the complementary product decreases
CROSS-PRICE ELASTICITY OF COMPLEMENTARY PRODUCTS
consumers who buy, also states that a higher price leads to a lower quantity demanded, and that a lower price leads to higher quantity demanded
law of demand
|Ed| >1 the demand curve
elastic
Q= F/(P-MC
BREAK EVEN QUANTITY
the investment earns more than the cost of capital
NPV NET PRESENT VALUE
product, geographic, and time dimension
market
types of cost based pricing
cost plus pricing
mark up pricing
break even cost pricing
target profit pricing
A term refers to situation in which as your business grows, you are able to lower your cost per unit.
ECONOMIES OF SCALE
describes seller behavior in a competitive market.
MARKET SUPPLY
