A)MANAGERIALECONOMICS 1)COSTANALYSISCost analysis is a comparison of costs.Cost analysisis an economical method of calculating and evaluating the systematiccollection, classification and examination of the costs of goods and servicesin an enterprise.Cost analysis is also the cost of a good or servicedetermination, analysis,calculation it is the process.Costs used to preparefinancial statements.
It enables the grow by increasing its competitive power in company.Allows the company’sprofit to be uncovered.Determine the selling price of the producedproduct,great guide.
-THECONSEPT OF COSTSThe total value cost at which all kinds of factorsinvested by businesses in order to obtain the goods or services entered intothe activity are expressed as money. Cost can be defined as the sacrifice madeto produce goods or services. It is a very important concept for businesses.Thecost is the sum of the production factors spent to obtain a unit of goods.Costis a vaue of the resourses used to produce a product or provide a service.Costis directly related the volume of goods and services.Cost used in any analysisare relevant to production.
costs are classified in economis according to theirrelation with output.those costs which vary as output varies in a givenproduction period are referred to as variable costs.some cost remain constantregardless of the level of output and are classified as fixed costs.-SHORT-RUNAND LONG-RUN COSTSIn economics, there are short-run and long-run costs.Ashort-run decision is one in which the firm is constrained in regard to whatproduction decisions it can make. A long-run decision is a decision in whichthe firm can choose among all possible production techniques.
The Short-run costhas the cost which short-term inclusionin the production process, these are used over a short range of output. Theseare the cost incurred once and cannot be used again and again, such as paymentof wages, cost of raw materials.The firm can not expand its facilities orchange the production function in the short run. A new production function thatleads to a different cost output relationship.
-COSTFUNCTIONSCost functions ensureto learn; predict the cost that will be experienced at a specific activitylevel.Cost functions are typically incorporated into company budgets,so thatmodeled changes in sales and unit volumes will automatically begin changes inbudgeted outgoings in the budget model.Cost functions are used for determinethe sales level at which a business will begin to generate a profit.Ineconomics,the cost function is firstly used by businesses to determine whichinvestments to make with capital used in the short and long term.
A costfunction meaning is a function of input prices and output quantity whose valueis the cost of making that output given those input prices. -PRODUCTION COST ANALYSISProduction cost refersto the cost incurred by a business when manufacturing a good or providing aservice. Production costs include a type of outgoings including, but notlimited to, labor, raw materials and general overhead. Additionally, any taxeslevied by the government. cost of producing a product depends on the cost offacilities and the volume of output.When the firm want to produce a product,this firm must be buy a raw materials and need a labour. If this firm will beproduce good and services, they will be stand this cost.
2)PROFITABILITY ANALYSISInorder to perform a profitability analysis, all costs of an organisation have tobe allocated to output units by using intermediate allocation steps anddrivers. This process is called costing.When the costs have been allocated, they can be deducted from the revenues peroutput unit. The remainder shows the unit margin of a product, client,location, channel or transaction.
Aftercalculating the profit per unit, managers or decision makers can use theoutcome to substantiate management decisions. Managers can decide to stopselling loss making products, to reduce costs for loss making customers or toincrease sales in profitable locations. -MAXIMIZING THE FIRM’S OBJECTIVEEvery firm has a objectives the main objectives offirms are:profit maximization,sales maximization,increased marketshare.Sometimes there is an overlap of objectives. For example, seeking toincrease market share, may lead to lower profits in the short-term, but enableprofit maximisation in the long run.
It is generally assumed that business firmsalways try to maximize their objectives by selecting the best alternativecourse of action in their pursuit of profits and growth.Whatever theconstraints, management must decide which objective will best serve theinterests or goals of the firm by adjusting production and sales to that levelwhich yields maximum satisfaction. A firm, for example, may desire to maximizerevenue, provided a specified profit is realized.However, if demand is limitedthe firm may have to settle for less.Maximization, therefore, implies that theprevailing conditions would permit management to expand sales to a level wheredesired objective is maximized. THECONCEPT OF PROFITProfit is a financial income that is achieve when theamount of revenue gained from a business activity pass over the outgoing, costsand taxes needed to continue the activity.
Profit is describe in economics asthe firm’s prize for services rendered under risk and uncertainty. Inmanagerial economics, the objective function of the has been defined as that ofplanning, obtaining, and convert capital, materials, and labor into products orservices be market at profit. In this sense profit can be expressed as thedifference between revenue and cost, revenue being the value obtained from thesale of the firm’s output in a given period, and cost being the value of theresources used in the production and sale of this output. -REVENUEFUNCTIONSRevenue is the amount ofmoney that a company actually receives during a specific period, includingdiscounts and deductions for returned merchandise.
It is the top line or grossincome figure from which costs are subtracted to determine net income.Revenueis calculated by multiplying the price at which goods or services are sold bythe number of units or amount sold.Revenue is also known as sales on the incomestatement.
revenueis the amount of money from the sale ofproduct and depends upon the price of a product and quantity of the productthat is actually sold. revenue is the income that a business has from itsnormal business activities, usually from the sale of goods and services tocustomers. Revenue is also referred to as sales or turnover. Some companiesreceive revenue from interest, royalties, or other fees.PROFIT MAXIMIZATIONANALYSISIn economics, profitmaximization is by which a firm maydetermine the price, input, and output levels that lead to the capacity profit.
The primary objective of the firm is maximization of profit. Toreach this objective management probably will marshal all of its resources toexpand output and sales to a level where marginal revenue is equal to marginalover this point, an additional unit produced and sold will cost more than theextra revenue that it will bring to the firm. REVENUE MAXIMIZATIONRevenue maximisation is atheoretical objective of a firm which attempt to sell at a price which achievesthe greatest sales revenue. This would occur at the point where the extrarevenue from selling the last marginal unit (i.e. the marginal revenue, MR,equals zero).
If marginal revenue is positive, an extra unit sold must add tototal revenue and revenue maximisation will not have been reached. Only whenmarginal revenue is zero will total revenue have been maximised.Stopping short of thisquantity means that an opportunity for more revenue has been lost, whereasincreasing sales beyond this quantity means that MR becomes negative and TRfalls. This can be seen in the following graph, with revenue maximisation atoutput Q, and at point A on the AR curve.The profit maximizingcondition assumes that the firm’s objective is satisfied when output and saleshave reached the point of maximum profit.
It is possible, of course, that themaximum feasible profit is less than the minimum profit required by a firm, inwhich case management may have to discontinue producing this product or lowerits minimum profit requirements. Another alternative to profit maximization isrevenue maximization. B)FUNDAMENTALS OFECONOMICS1)FISCAL POLICY-BUDGETDEFICITS AND SURPLUSES,DEMAND-SIDE AND SUPPLY-SIDE EFFECTS OF FISCAL POLICYThe fiscal policy is policies that the state uses to finance theeconomy to ensure that the economy reaches full employment, to minimizeeconomic fluctuations, and to create a fair wealth and income distribution. Itforms the economic policy together with the monetary policy. It is the policies that the state implementsusing tools such as taxes and public expenditures, to ensure that the economyreaches full employment and to ensure a fair distribution of income.
The effectiveness of fiscal policy depends ontwo main factors: the sensitivity of investment expenditures to interest rates.Thesensitivity of the amount of money requested to interest rates.budget deficits may result from unanticipated spending increasesin the budget period, and budgets may be clarified at the beginning of theperiod. In this case, how to open the door is also shown. For example, it cango from borrowing from the state, from financial institutions, or from foreigncountries. Due to the difficulty of finding resources, it is usually not possiblefor the budget to be open for long periods of time.
However, it may be possiblefor the public budget to give a few years of deficit, even in terms of economictheory. Because, according to Keynes’s Theorem, budget deficits and surplusesare among the main tools that can be used to prevent economic instability. Inthe case of an economic instability, the equivalent budgetary practice leads tofurther instability.
Demand-side economy, efficient use of resources in theeconomy,economic growth and development, a fair income and wealth distributionand the economic stability of the state to ensure the “total economicthought that suggests guiding decisions on “demand”.The theoreticalfoundations of demand-side economics are described in J.M. Keynes published in1936, “Employment, Interest and Money in General Theory “.Supply-side policies are policies that aim to increase thecapacity of the economy to produce. However, it is also possible for fiscalpolicy to act on the level of supply and government will often use fiscalpolicy as one of their key supply-side policy tools.
Income tax may have aneffect on people’s incentives to work. This will be true at most income levels.If income tax at low income levels is too high, people may choose not to workbut to remain on social security instead. If income tax on high levels ofincome is too high, people may choose not to work so hard and take risks.Ultimately they could make the choice to leave the country if taxes elsewhereare much lower.EFFECTS OF MONETARYPOLICY Monetary policy refers to the course of action acentral bank or government agency takes to control the money supply andinterest rates in the national economy. Effective monetary policy supportsactions that lead to the best possible standards of living for a nation’spopulace. This means attempting to control interest rates, levels of inflationand employment levels.
monetary policy is to lower the exchange rate, weakenthe financial account and strengthen the current account. A restrictivemonetary policy would be expected to result in the opposite: a higher exchangerate, a stronger financial account and a weaker current account .INFLATION AND ECONOMICFLUCTUATIONSInflation is a situation in which the general level of prices increasescontinuously and is felt. 1 Another definition is the nominal nationalincome, which is the increase in the amount of goods purchased with this income(actual national income), ie, the swelling. Deflation is the opposite.Twoconditions are mentioned in the first definition The price is not the firstprice but the general level indicator.Secondly, it is emphasized that the titleof the increase is constant one or more times.
The general level of prices isthe monetary value of a selected set of goods and services in the economy(basket). Prices are based on the balance between goods and services and theamount of money in circulation. If the emission is balanced by the increase inthe amount of goods and services (growth), the overall level of prices will notchange. But if one of them is produced more than the other, it becomes lessvaluable.
The so-called increase anddecrease in the real production volume of the economy are called conjuncture.The conjuncture expresses the alternating growth and contraction periods of theeconomy. The conjuncture period has four stages: peak, contraction, bottom andexpansion.Economists often use deprecation or depression phrases to describemuch longer periods of time and much more severe shrinkage, while gross nationalproduct refers to shrinkage or stagnation that lasts at least six months.