Understanding Pricing, Costs, And Profits For Industries

In understanding pricing, costs, and profits for industries, one must understanding the following areas: demand curve, marginal analysis, stay-even analysis, marginal cost, economies of scale, learning curve, economies of scope, shift in demand, shift in supply, market equilibrium, and strategies for keeping profit from eroding. These are the critical function that every organization or industrial business needs to be successful. The upper management team needs to know and understand that concept of economics in order to make the best decision for the industry or the organization. The demand curve represents how much consumers will purchase at a given price. Economists use jargon describing the response such as â€Å"price decreases then†¦show more content†¦70). Marginal analysis is generally used in microeconomics to analysis the complexity of a system that may be affected by marginal manipulation of its comprising variables. One of the principle that is used in marginal analysis for government decision making rationale of the individuals. An individual might weigh such decisions as whether to take a vacation, work additional hours, or even have an extra glass of wine with dinner as an example. The government officials weighing the costs and benefits can help in determining whether allocating additional resources to a specific public program will generate extra benefits for the general public (â€Å"Marginal Analysis,† n.d.). â€Å"Stay-even analysis is a simple tool that allows you to do marginal analysis of pricing. It is used to determine the volume required to offset a change in price. Stay-even analysis tells you how many unit sales you can lose before a price increase become unprofitable† (Froeb, McCann, Shor, Ward, (2015); p. 77). â€Å"Marginal cost is the increase or decrease in the total cost a business will incur by producing one more unit of a product or serving one more customer† (Grimsley, n.d.). If the cost is lower if would be because the industry or organization took advantage of discounts for bulk purchases of raw materials, make full use of machinery, and engage specialized labor. An example of â€Å"marginal cost is considered, trying to find a parking space could be only