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.…
Economics
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.…
Decision Under Certainty and Uncertainty
Chapter – Decision Analysis Decision under certainty and uncertainty: Certainty in decision analysis refers to the situation in which the decision maker has complete and reliable information on all possible alternatives and outcomes, and on…
Consumption Decision in Short Run and Long Run
Consumption decisions in the short run are more or less rigid or less elastic because, in the short run, the factors affecting consumption are given and do not change immediately. For example, in the short…
Advertisement Elasticity of Demand (Ea) – Examples and Uses
Advertisement Elasticity of Demand is the degree of responsiveness of the quantity demand of a product to a change in advertisement expenditure. or, Ea = (ΔQd/ΔA) * (A/Qd) Advertisement elasticity of demand is generally positive,…