The criteria that firms apply to decide whether to produce a component part or purchase it in the market.
Concept Introduction:
Firms have to list criteria before deciding how to produce a component, based on objectives like profit-making, the cost involved, production limitations like resource availability, etc.
Explanation of Solution
Firms always have to decide between making a component or buying it outside. Their decision is always based on criteria like profit expectation and relevant cost of decision making.
Want to see more full solutions like this?
- Typed pls and asap please provide a quality solution for better ratings please And take care of plagiarism alsoarrow_forwardProduct life cycle of IKEA productsarrow_forwardPRINT YOUR NAME (LAST) (FIRST) Aggregate Cost Data Unit Cost Data Average Average Average I Fixed Variable Total Cost TC Marginal Quantity Fixed Variable Total Change in I Cost of Output (FC) (VC) Cost ATC Cost Cost Total Cost (TC) (ATC) Plot MC at Output Cost Cost IFC VC $600 $ 0 $ 600 I XX XX XX XX $3.00 $300 50 100 600 300 900 I $6.00 $3.00 $9.00 100 1.00 150 200 600 400 | 3.00 2.00 5.00 50 .50 - 250 300 1050 I 2.00 1.50 1.00 350 400 1150 I 1.50 1.38 2.88 200 2.00 - 450 500 600 750 1350 I 1.20 1.50 550 600 600 1200 1800 3.00 10.00 - 650 700 2200 2800 I.85 3.15 PLOT THE APPROPRIATE DATA FROM THE PRECEDING TABLE ON THE GRAPHS ON P. 134 AND 135 BEFORE ANSWERING THE EIGHT QUESTIONS BELOW. QUESTIONS 5-8 ARE ON PAGE 136. 1. How is marginal cost (ATC/AQ) represented in your graph on page 134? 2. On your graph on page 135 Variable Cost per unit (VC/Q or average variable cost) is at a minimum at an output level of, units. 3. On your graph on page 135 Total Cost per unit (TC/Q or average…arrow_forward
- Unit 9 - Cost Revenue and Profitarrow_forwardInstruction Please answer all the questions by filling in the blanks or showing working calculation. Question 1 A firm's costs are given in the following table. TC TFC TVC AVC ATC MC O RM50 1 70 80 3 90 4 110 5 140 6 175 7 220 8 280 9 360 10 450 1.1) Complete the table. (4M) 1.2) Draw a graph for each AVC, ATC and MC on one graph. (2M) 1.3) Suppose market price is RM20. How much will the firm produce in the short run? How much are total profits? (2M) 1.4) Suppose market price is RM60. How much will the firm produce in the short run? How much are total profits? (2M) (10 Marks) Working calculation and answer:arrow_forwardPrice Quantity (Dollars per lamp) (Lamps) Produce or Shut Down? Profit or Loss? 15 Shut down Loss 20 Shut down Loss 25 Either 0 or 45,000 Either shut down or produce Loss 55 60,000 Produce Break even 70 65,000 Produce Profit 85 70,000 Produce Profitarrow_forward
- Economics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub Co