We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Production And Perfect Competition - Market Activity - Coursework Example

Comments (0) Cite this document
Summary
Production and Perfect Competition – Market Activity 1. Should the firm shutdown immediately when the total fixed cost equals $1,000,000? Should the firm shutdown immediately when the total fixed cost equals $3,000,000? For convenience in explanation, the situation where the Total Fixed Cost (TFC) equals to $1,000,000 is named as Case A and the situation where the TFC increases to $3,000,000 is named as Case B…
Download full paper
GRAB THE BEST PAPER
Production And Perfect Competition - Market Activity
Read TextPreview

Extract of sample
Production And Perfect Competition - Market Activity

Download file to see previous pages... 2: Losses to be incurred in Case B Fig. 3: Other Variances As can be observed with reference to the above illustrated calculations for both the cases A and B, the firm is projected to witness significant changes in terms of its losses incurred. Apparently, in both the cases, the firm will have to suffer huge losses. However, when comparing both the cases, i.e. when the TFC is $1,000,000 and when the TFC is increased to $3,000,000, the firm will have to suffer greater losses in Case B with the rise in its TFC. To be noted, with the TFC amounted to $1,000,000, the firm is projected to incur a loss of $400,000; whereas, with a TFC increment to $3,000,000, the firm will have to suffer a huge loss of $2,400,000. Considering the amount of calculated per unit and per work loss for the given cases, it can further be observed that the loss incurring risks will increase substantially if the firm decides to operate with a TFC of $3,000,000, which can further be deemed a unrecoverable without huge sums of additional investments. On the other hand, the losses incurred in case A can be deemed as recoverable for the firm, subjected to its strategic and managerial efficiencies (Schmitz Jr., 2005). Therefore, comparing and contrasting the changes in the cost variables which the firm might have to incur in both the cases A and B, it can be suggested that the firm should immediately shutdown when its TFC increases to $3,000,000, i.e. in case B. 2. For one of the cases, if the firm can operate at a loss in the short-run, how many employees need to be laid off in order for the company to break even? Break-even is commonly defined as the situation when the total revenue of a firm equals the total amount of costs incurred for a given quantity of output (Armstrong, 2006). In other words, when the firm will incur neither loss nor profit, it can be stated that the firm has reached its break-even. Considering the calculations in fig. 1 of the above section, it can be apparently observed that for case B, the firm will have to incur a huge loss of $2,400,000 and therefore should shutdown immediately. In contrast, when the TFC amounts to $1,000,000 in case A, the firm will have to incur a loss of $400,000. Hence, it can be affirmed that the company can operate at a loss in the short run when its TFC is $1,000,000 incurring lesser loss than that projected in case B. Furthermore, when the firm incurs $400,000 loss in case A, it shall have to lay off 5,000 employees, assuming all other variables to be fixed. To be specific, with the given daily wage rate of $80, the total wage for 45,000 workers (i.e. 50,000-5,000 workers) will amount to $400,000 which is again equivalent to the loss projected to be incurred by the firm with a TFC of $1,000,000. Therefore, by laying-off 5,000 employees, the firm will be able to reduce it variable cost by $400,000 and consequently, will not have to incur any loss. In such circumstance, the total cost to be incurred by the firm will be, TFC ($1,000,000) + TVC ($4,400,000 - $400,000) = $5,000,000; equivalent to the total output of the firm. Hence, it can be concluded that by laying-off 5,000 employees, the firm can reach its break-even when TFC equals to $1,000,000. 3. Given a Lower Number of Employees Now Working at The Company, What is the Change in Worker Productivity? In the above illustrated calculations, it was derived that ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Production And Perfect Competition - Market Activity Coursework”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1480808-production-and-perfect-competition-market-activity
(Production And Perfect Competition - Market Activity Coursework)
https://studentshare.org/macro-microeconomics/1480808-production-and-perfect-competition-market-activity.
“Production And Perfect Competition - Market Activity Coursework”, n.d. https://studentshare.org/macro-microeconomics/1480808-production-and-perfect-competition-market-activity.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Training Activity
There is also a need here to convey to the employee what the company plans to do in the future, its goals and plan of action so that the level of uncertainty is reduced. Motivation levels are low in the company. One of the training needs should be to improve the level of employee motivation so as to improve productivity.
4 Pages(1000 words)Coursework
Toyota Production System
TPS formed the “life-blood” or permeated Toyota in a way that competitors could not imitate either locally in Japan or elsewhere – wherever the company moved its production facilities to. In examining location advantages we highlight why UK companies outsourced their call centres to India using the CAGE framework (Cultural distance, Administrative and political distance, Geographic distance and Economic distance).
3 Pages(750 words)Coursework
Integrating Design and Production
Thus integrated design and production systems have been mixed with several technologies and built on the line of collaboration of the participants. Therefore it would be a successful approach if the participants shared their common goals and values to achieve particular objectives.
31 Pages(7750 words)Coursework
Production And Perfect Competition - Megamergers and Oligopoly
According OaShaughnessy (2005), a market is defined as “a group of buyers and sellers in sufficiently close contact with one another, that exchange takes place among them". From economic point
1 Pages(250 words)Coursework
Production system optimization
It can be improved by either increasing the cycle times at every LV Door or by reducing the number of workstations at every LV Door for all LV Doors available in the system. For example, we can increase the cycle times in every LV Door while
2 Pages(500 words)Coursework
Unit 41, unit 38
A Sole Trader is a type of business entity which is owned and run by one individual and where there is no legal distinction between the owner and the business. It has unlimited liability, which means if the company
40 Pages(10000 words)Coursework
Five Forces of Competition Model
Thus, Apple Inc. faces the threat of competition/rivalry from other big companies like Microsoft and Samsung for its hardware products like the Mac computers, iPhone smartphone, iPad and iPod; Google, Mozilla etc. for online services like
1 Pages(250 words)Coursework
Discuss the findings of the OFGEM report with regards to the UK energy market; and discuss if more competition between the big six UK energy firms may benefit UK consumers
OFGEM (which in full refers to; Office of gas and electricity markets) is an organisation that governs energy market in UK. Many scholars suggest that, Energy market operations tend to favour suppliers, as shown by the increased margins of profits as
6 Pages(1500 words)Coursework
Discuss the findings of the OFGEM report with regards to the UK energy market; and discuss if more competition between the big six UK energy firms may benefit UK consumers
Sources such as coal and natural gas are nonrenewable and therefore exhaustible. Energy production and supply has been very expensive across the world in the recent past. The increase in the production and supply costs has led to the
6 Pages(1500 words)Coursework
Networking Activity
My cousin is one of the middle managers at the organization, and I was attending a birthday party that he hosted. Tawni Cranz was also in attendance. During my conversation with her,
1 Pages(250 words)Coursework
Let us find you another Coursework on topic Production And Perfect Competition - Market Activity for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us