Profit Maximization
Managerial Economics and The Firm Profit Maximization Explain what is the principle of profit maximization? Profit maximization is when a firm's primary objective is to make the most amount of profit possible when trading within its market .The traditional theory of the firm is based on the assumption of short-run profit maximization (Sloman, 2004). But there is an alternative theory which assumes that managers aim to shift cost and revenue curves so as to maximise profits over a long period. Many believe that the long run profit maximization theory would be a good alternative to the short run theory, but realistically it is very difficult to test. Source: www.businessbookmall.com Profit maximizing is based on two assumptions; that owners are in control of the day-to-day management, and the main aim of the owners is for higher profit. Profit is maximised where marginal revenue equals marginal cost. Shareholders (principles) employ managers (agents) to act on behalf of them to run the day-to-day business. As it is the managers that run the firm and not shareholders a conflict of goals and targets may occur, 'principal-agent problem' which can drastically affect the outcome of profit maximization. Explain profit satisficing. Profit satisficing is when firms set themselves acceptable levels of profit. It is seen that owners of a firm are willing to achieve 'satisfying'
The Auditing Process - Applied.
The Auditing Process - Applied Abstract The traditional audit or assurance process associated with the assessment of financial records has diffused into other professions. In essence, auditing functions carried out by Road Authorities shares a number of similarities to that used by a traditional external auditor. The differences between the traditional audit and a road safety audit lies in the nature of the audit process. Introduction Traditionally, the audit process was linked to the checking of financial accounting records and reports. Over the past decade, however, road authorities have also adopted an audit function to increase the safety of road users. The objectives of the audit determine the nature of the audit process and the criteria used by an auditor to form and express an opinion. The Diffusion of the Audit Process Across Professions Malcolm Bulpitt developed roadway audits in the United Kingdom in the 1980s1. Road Safety Audits were introduced in the State of New South Wales, Australia, in 1990, when the audit of the Pacific Highway used specially prepared checklists2. In 1994, the Austroads guide Road Safety Audit was published3. A Road Safety Audit (RSA) as defined by Austroads is: A formal examination of an existing or future road or traffic project, or any project that interacts with road users, in which an independent, qualified examiner looks
Indian Oil
ECONOMICES IV INDIAN OIL CORPORATION LIMITED TOPIC: "USING THE MICRO-MACRO ANALYSIS MODELS DEVELOPED IN THIS UNIT, CONDUCTING THE ENVIRONMENATAL ANALYSIS OF BUSINESS AND SUGGESTING THE COMPETITIVE STRATEGY TO COVER THE NEXT FOUR YEARS" BY SARABPREET SINGH STUDENT ID: 10015393 Executive Summary Indian Oil Corporation Limited (IndianOil) is the largest producer of oil and natural gas in India. IndianOil was formed in1964 through the merger of the Indian Oil Company and Indian Refiners Ltd. IndianOil is highest ranked company in the Fortune 'Global 500'and 21st largest petroleum company in the world . IndianOil is widening the horizons with international investments like Indian Oil (Mauritius) Ltd and subsidiary, Lanka IOC ltd. The economic environment for the company is favourable for the IndianOil. This project is the micro and macro analysis of the company's economic structure .The company has the oligopoly structure as the products are almost homogeneous and entry of the new competitor is limited. Macro-economic factors are affecting the business including the international market for the crude oil and policies of the Organization of Petroleum Exporting Countries (OPEC). TABLE OF CONTENTS Abstract........................................................................................2
Statistics report
Vietnam National University, Hanoi School of Business 44 Xuan Thuy, Cau Giay District, Hanoi, Vietnam, Tel. 84-4-7680456 Fax: 84-4-7680455 www.hsb.edu.vn Mark MANAGERIAL REPORT To: Pelican Management From: Nguyen Huu Hung (Mr.) ReMBA#7 Date: 10th December 2008 Subject: The promotional Campaign Results Dear Sir or Madam, This is my full report about coupon promotion results. I used data analysis to express the result on the amount of credit card sales during the coupon promotion period for the month of November 2008. I have prepared some descriptive statistics that will help you see distinct relationships between variables. More specifically, i am trying to determine the relationship that does or does not exist between age and type of customers, net sales of each customer, number of customers that participated in the promotion, method of payment, marital status and gender. These statistics will help you further understand the company's customer base and target audience. I have included suggestions regarding the company's next coupon promotion period that will help you to better address your main audience. . Percent frequency distribution for key variables FREQUENCY DISTRIBUTION Age of Customers Range of Customer Age Count Freq.(%) Rel. Freq. 20-29 0 0% 0.10 30-39 30 30% 0.30 40-49 33 33% 0.33 50-59 6
Explore the relationship between aggregate expenditure, construction output and employment in a developed or developing country.
Explore the relationship between aggregate expenditure, construction output and employment in a developed or developing country. In a broad sense, macroeconomics can be viewed as the study of aggregate trends in an economy and has been a central concern of economists for centuries. By observing all the economic theories that have been developed throughout the history of mankind, it can be concluded that aggregate expenditure, construction output and employment are highly dependent one to the other. Before their relationship is further analysed though, some of their basic concepts should be defined. Because of the limitations in the length of this paper, it was not possible to analyse all of the different theories, therefore the Keynesian approach to the subject was chosen. A detailed study of the Basic Keynesian Aggregate Expenditure Model will help us understand why changes in aggregate expenditure exert a powerful influence on equilibrium output and employment. First of all there are several assumptions that need to be made in order to simplify the analysis; wages and prices are completely inflexible until full employment capacity is reached and government's taxing, spending and monetary policies are constant. Equality between aggregate expenditure and output is central to the Keynesian analysis. Aggregate expenditure is defined by Keynes (1936) as a relationship
Economics of Electiricty Network Regulation
Electricity network regulation DISCUSS the rationale for economic regulation of energy networks in general and the use of "incentive regulation" approaches in particular and (2) pros and cons of using benchmarking methods in incentive regulation of the networks. The rationale for economic regulation of energy of energy networks is to remove monopolisation in naturally monopoly characteristic industries, helping to create a more natural market. Energy is a resource that is so key to development. By regulating the energy networks, it can potentially allow for a much wider consumer base and assist in development through allocative efficiency The UK government, under conservative governance, went under an extensive privatisation in the 1980's. By 1990 they had ventured into extensive electricity sectors reforms- ''The most ambitious exercise in the whole UK privatisation programme" (Yarrow 1994, to transform a stagnant, inefficient industry with high capital costs and low returns, into a competitive industry. Unbundling the generation, transmission, distribution and supply services and introducing competition in generation and supply (T. Jamasb 2000) Privatisation, has led to incentive based schemes. Incentive based schemes are used to encourage good performance and efficiency improvements in the energy networks. Schemes have been around since the early
What is the role of menu costs in New Keynesian models? Is the importance placed on menu costs in these models justified by the empirical evidence?
EC201 Assessment One Question: What is the role of menu costs in New Keynesian models? Is the importance placed on menu costs in these models justified by the empirical evidence? Most economists believe that short-run fluctuations in output and employment represent deviations from the economy's natural rate. They think these deviations occur because nominal wages and prices are slow to adjust to changing economic conditions. This stickiness makes the short-run aggregate supply curve upward sloping rather than vertical. For decades, many New Keynesians worked on possible reasons and relevant evidence for the price stickiness by putting the traditional theories of short-run fluctuations on a firmer theoretical foundation, examining the microeconomics behind. Among these well-known economic theories, menu cost is the one I will talk about here. The aim of this essay is to demonstrate the role of menu costs in New Keynesian economic models and find out whether it was justified by the empirical evidence. Before talking about the role of menu costs, I have to point out that the fundamental 'new' idea behind New Keynesian models is that of imperfect competition. All the major innovations of the New Keynesian school are made possible or worthwhile only because of imperfect competition. By this I mean that all the firms set their own profit-maximizing prices rather than take from
Halliburton company - Case Study.
HALLIBURTON COMPANY Case Study Jeff Sullivan March 6, 2003 HALLIBURTON CO. INTRODUCTION At the time, the announcement seemed like just another client dropping Arthur Andersen, LLP as an auditor. In the wake of the Enron debacle, Andersen was being dropped by its most prestigious clients one by one. In April 2002, Halliburton Co. announced that it was dropping Andersen, their auditors since 1946, in favor of KPMG. In approximately one month, it would be discovered that Enron was not the only Andersen client with questions regarding accounting records. However, this was not just another company with just another executive - the Halliburton CEO during the time period in question was the current Vice President of the United States, Dick Cheney. Mr. Cheney's tenure as CEO spanned six years, from 1995 to August 2000. The issues with Halliburton's accounting methods arise from entries altered during the 1998 fiscal year. The Securities and Exchange Commission (SEC) notified Halliburton that they were investigating how the company treated cost overruns on construction jobs. The company also altered its accounting practices in 1998 so it could report more than $100 million in disputed construction costs as revenue, and failed to disclose the change to investors for more than a year. Of these two issues, the failure to disclose the accounting change is more serious.
What implication does the permanent income hypothesis of consumption have for the value of the multiplier in the short- and long-run?
Essay What implication does the permanent income hypothesis of consumption have for the value of the multiplier in the short- and long-run? The number of times that an increase in income (?Y) is greater than the increase in injections (?J) is known as the Keynesian Income Multiplier (k). k = ?Y/ ?J = 1/(mpw) = 1/(1- mpc) The diagram (Fig.1) shows that an increase in injections (?J) (e.g. a rise in government expenditure G or an increase in Investment I) shifts the injections line upwards. Consumption increases and thus the aggregate demand line AD shifts upwards and induces an increase in national income. If this increase in national income (?Y) exceeds the initial rise in injections (?J), it is referred to as the multiplier effect. The multiplier effect can be explained by the fact that if extra spending is injected into the economy, it will then stimulate further spending which in turn will stimulate yet more spending and so on. According to the multiplier formula, k=1/(mpw)=1/(1- mpc), the size of the multiplier depends on mpc or on mpw respectively. The marginal propensity to withdraw (mpw) indicates the proportion of a rise in national income that is withdrawn. The marginal propensity to consume (mpc= ?C / ?Y) indicates the proportion of a rise in national income spent on consumption. The bigger mpc, the smaller is mpw and vice versa since the additional sum of
Now consider the impact of taxing just the wages of prostitutes. Since prostitutes are not currently taxed, what would the economic impact be? According to the National Academy of Sciences of the United States, there are 22.1 prostitutes
William F. Tschanen Professor Kuhta English 121, Module 16 22 February 2006 It is Moral to tax Sin Today, taxation is rampant. Almost every entity of government has figured out a way to tax us. I just reviewed my cell and satellite TV bills including their high taxes. The cell bill's tax rate is over 30% and the satellite TV tax rate is 28.9%. I filled up with gas yesterday and nowhere on the pump was I informed about the taxes I paid on a gallon of gas. According to www.energy.ca.gov, the tax on a gallon of gas in the State of Florida is 48 cents per gallon. Even at our appallingly high gas price of $2.00 per gallon, that is a tax rate of 31.6% on gas, which is an absolute necessity. The time is right to tax people's vices on a more consistent manner by taxing prostitution. With such a proposal, the religious community (of which I am a member) and people of a moral character will be up in arms at the mere thought of legalizing and taxing prostitution. They will have their moral outrage sharpened to a fine edge. They will rail against the very notion, and cite example after example of lives ruined by prostitution. Their moral outrage will be palpable; their justifications many! However, when you dispassionately consider the facts about prostitution, the arguments for legalizing and taxing it are compelling as follows: 1. Prostitution is victimless involving