Indeed, organizations should have an appropriate knowledge about the transaction cost before stepping in. Coase (1937) argued that there are conditions under which it is more efficient for a firm to create an internal market rather than enter foreign ones. This explanation implies that companies weight their expense of trading asset internationally against the bureaucratic cost of performing activities in-house. Indeed, companies will grow as long as they can perform cheaper within their enterprises rather than to outsource their product to external provider. With the emerging of the multinational enterprises, production can take place in the home market itself thus giving rise to a leverage of intangible asset and expertise internally.
The concept of surplus value used by Karl Marx declared that workers not only create economic value through the wages paid to them but also through the more value of transforming economic resources into valuable products. This allowed economies to experience more profit through producing goods, rather than simply earning income from the sale of property. Marx believed that this additional income could be
Hume’s influence on Smith, has to be underscored and appreciated; the former’s view that self-interest could be channelled profitably only through economic cooperation and competition was the basis of Smith’s thinking as well. Furthermore, Hume viewed everything in the world as having value due to the amount of labour put into it and favoured a labour theory of value,wealth is a product of physical or mental labour, and Smith’ s thinking reflects the same, it can be thus inferred that the latter borrowed it from Hume. Both thinkers also had as an intellectual focus, economic growth and its causes. Hume’s theory of taxation challenges the view of French physiocrats and questions the subsistence theory of wages and the view that entrepreneurial activity does not yield a surplus. National wealth would be enhanced if taxes were raised a little so as to incentivise the individual to work but too big an increase would curtail the incentive to work harder and have a pernicious effect on the economy.
This stickiness contributes to the dimensions of management behavior. Anderson et al. (2003) and Suberamaniam and Weidenmier (2003) found that this stickiness is connected to the economy. Noreen and Soderstorm (1997) do not share this view and Cooper and Kaplan (1997) believe the behavior of costs results from management characteristics. Their fundamental theory says that cost stickiness results from a series of managing contracts to increase resources (raw material, human capital, etc.
The equilibrium must lie on the upward sloping part of the marginal cost curve. This is because when marginal costs are falling, it is better for the firm to expand (McEachern, 2008) and therefore an equilibrium not on the upward sloping part of the curve is not optimal and a higher profit can be achieved. However, there may not be an upward sloping part of the marginal cost curve above the average variable cost (note: average variable costs are equal to average costs in the long-run (Hubbard et al., 2014)). Therefore, the output of a competitive firm is determined by the upward sloping part of the marginal cost curve above the average cost curve in the
A discussion on the importance and limitations of the production possibility curve (PPF) within Managerial Economics will be detailed further. The production possibility frontier/ curve (PPF) is used to describe the production capacity of a country. Typically, it is reflected with two dimensions for convenience, though in reality it has many dimensions, one for each product (good) that could be produced. It also portrays the underlying condition of scarcity and unlimited wants that are paramount for neoclassical economics. The underlying scarce resources determine the limits of the production output, and thus consumption.
This is the total spending in the economy. In the Keynesianism view, aggregate demand does not inevitably equate the productive capacity of the economy, in its place, it is influenced by a host of factors and sometimes behaves erratically thus affecting employment, production and inflation. Keynesian economists argue that decisions made in the private sector often lead to wasteful macro-economic outcomes that require active policy responses by the public sector (Skidelsky: 2015: 3). For instance, these may be monetary policy actions by the central bank and fiscal policy actions by government to stabilise output over the business rotation. Overall, Keynesian economists advocate for a mixed economy that predominantly is operated by the private sector but with a role for government intervention during recessions.
A market is an exchange establishment that serves society by organizing economic activity. Markets uses price to communicate the wants and limits of a wordy and varied society so as to bring about coordinated economic decisions in the most efficient manner. Markets will works well when prices reflect all the values. Market failure occurs when some of the cost or benefits are not fully redirect in the market price. Market failure is the failure of the market to deliver the socially ideal output and the entire market system would then deliver a sub-optimal mix of goods and services (Ellen Sewell, 2010) Market failure and its sources is the most important part because these are the factors under which the government intervention into the market
In industrial marketing, the marketer should realize that demand for industrial goods results from the final consumer demand, that is, the demand for a product depends on how it is used in relation to other products. Sometimes, industrial marketing tries to propagandize the final customer demand with advertising to increase demand for its industrial goods. The simplest definition for the price is that the price is the monetary and material value of the products and services. Companies, manufacturers, vendors and suppliers of pricing products
What to produce is about this problem is what the economy should produce in order to satisfy consumer wants (as seen by demand curves) as best as possible using the limited resources available. If a country produces goods in a way that maximizes consumer satisfaction then the economy is allocatively