Price and Output Determination Under Monopoly Market
It is the market structure where there is a single seller and a large number of buyers, a unique product that does not have any close substitutes, and barriers to entry. Being a single supplier,…
Price and Output Determination Under Perfect Market
Perfect Market It is the market structure where a large number of buyers and sellers, with homogeneous products, are present. The number of buyers and sellers is so large that there is a complete absence…
Modern Theory of Cost
Proposed by or based on George Stigler (in 1939) The traditional theory of cost was criticized both theoretically and empirically by the modern theory, which argues that the average cost, both in the short run…
Cost Approach vs Resource Approach of Production Planning
1) Cost Approach of Production Planning: This approach of production planning aims to minimize the cost. If the output is given ot pre-determined, then the objective of the firm is to minimize the cost and…
What is Share Capital?
A share capital is the amount raised by issuing shares by the company. The shareholders are the owners of the company. The total capital is divided into small parts, and each part is called a…
Joint Product Pricing
If a firm produces two or more products jointly, then the pricing of these different products is the joint product pricing. Under the joint pricing, it is difficult to find the cost of the individual…
Economies of Scope and Economies of Scale
What is Economies of Scale? Economies of scale are defined as the benefits to the firm in the form of a reduction in per-unit cost due to the large scale or expansion of the business.…
Production and Cost
Average Cost Curve: Short-run and long-run average cost curve Short-run Average Cost Curve i) Average Fixed Cost (AFC) Curve: AFC is the per-unit fixed cost, and AFC continuously declines as the level of output increases.…
Transfer Pricing Its Importance and Uses
It is a tool/instrument of tax planning avoidance. It is the mechanism for determining the cost/price while transferring a product or service from one department to another. Transfer pricing is the method used to determine…