It involves the problem of what is called short-run cost minimization. The second layer, including the determination of the most profitable quantities of products to produce in any given plant, deals with what is called short-run profit maximization. The third layer, concerning the determination ...
Cost theory and pricing go together hand in hand, and the importance of this part of economics has grown exponentially through the past decades. Therefore, it is my primary goal to show you, the business students, how to optimize the price and output in order to maximize profits. Price opti...
It was argued that, in such cases, the price of each commodity will be such as to equate the demand for and supply of each, subject to the condition that the prices of the commodities are sufficient "to repay the expenses of their production, with the ordinary profit" (Mill 1909, p....
In that year Stulz (1984)first suggested a viable economic reason why a firm's managers, who are presumed to be working on behalf of firm owners, might concern themselves with both expected profit and the distribution of firm returns around their expected value. He provided a rationale for ...
Money and Inflation Bennett T.McCallum,EdwardNelson, inHandbook of Monetary Economics, 2010 2The Quantity Theory of Money Any exploration of the relationship between money andinflationalmost necessarily begins with a discussion of the venerable “quantity theory of money” (QTM). There is, nevertheles...
Log In Sign Up Subjects Business Economics Marginal cost Theory of profit maximization: How could the profit increase when the marginal cost of producing...Question: Theory of profit maximization: How could the profit increase when the marginal cost...
Neoclassical economic theory suggests that economic surplus is also defined as the difference between the production cost and price of a good or service. The theory further looks at how a product can be sold at a profit due to how it has more value than its production cost reflects. This is...
Ordinarily, costs refer to the money expenses incurred by a firm in the production process. But in economics, cost is used in a broader sense. Here, costs include imputed value of the entrepreneur’s own resources and services, as well as the salary of the owner-manager. ...
the profit motive being a benevolent force acting on society was also a frequent target. While the idea of the profit motive is still seen as broadly correct and able to explain economic activity in general terms, it is not meant to be a playbook for companies to use in all their ...
Keynesian economics represented a new way of looking at spending, output, and inflation. Previously,classical economic thinkingheld that cyclical swings in employment and economic output create profit opportunities that individuals and entrepreneurs would have an incentive to pursue. In so doing, they wo...