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…
Cost Center and Profit Centers of the Organization
Cost Centre – Do not generate revenue. For example, the IT Department and the HR Department. Profit centre – It generates revenue. For example, the Sales Department. In the modern corporate business, the organisation has…
Transaction Cost and Boundaries of the firm
The expansion of a business enterprise is beneficial in terms of the economies of scale and scope, creation of market power, development and utilization of brand value, etc. However, expansion of the business indefinitely is…
Economics of Organization – Expansion of Enterprises
Reasons for expanding the enterprises: A business enterprise expands its size in terms of the market share, sectors, products, etc. It means that a business organization, over a period of time, can be seen expanding,…
Decision Analysis Problem (DAP)
Decision Analysis Problem (DAP) is a systematic way of assessing the various alternatives and selecting the best alternative to achieve the objective. So, DAP is related to the appropriate decision-making by an individual or organization.…