Congestion as an externality.

Congestion as an externality In economic terms congestion is a mixture of externalities, information failure and transaction cost. Negative externalities exist as cars produce emissions, which are harmful to the environment, the wear and tear of roads, and the opportunity costs are not included in the monetary costs of motoring. Drivers are both the cause of the externalities; and are the victims of others at the same time. One can say that the information failure is very clear, as drivers are not effectively told of delays and congestion before they take there journey, if this was to be done it would help reduce congestion on the roads. However the market that currently exists doesn't produce these kinds of signals to the consumer, so this solution wouldn't ever be perfect, as the congestion will eventually just transfer to the alternative rout. All these externalities represent market failure; this can be said because the socially efficient output is not produced. The social optimum amount of vehicles on the road must be exceeded if congestion results. When taking a journey motorists will decide whether or not to make a journey on the basis of their valuation of the benefits from the journey and their valuation of the alternatives in terms of time and money for petrol and other variable costs. They will not consider the additional cost imposed on other road users. This

  • Word count: 652
  • Level: University Degree
  • Subject: Business and Administrative studies
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Walkers Quality Assurance

WALKERS QUALITY ASSURANCE Tayto has always been a quality conscious company and in 1990 was awarded the Q Mark. The overall objective of the Quality System is to ensure that Tayto produces quality products and services and that each member of staff has an individual commitment to this quality. The Quality System encompasses all aspects of the business from the purchasing of raw materials through to the transportation and selling of products. Quality control checks are in place, prior to production, during production and post production as follows: Each delivery of potatoes is checked for size, variety, dry matter, sugar, clay or other defects. The sugar content is critical for crisp production and must be within parameters agreed by the company and the potato grower. The dry matter is also important as it determines the texture of the crisp. Prior to unloading the sunflower oil, a sample is taken and four different chemical tests are carried out to ensure that the oil is of good quality and suitable for the production of crisps. Thereafter the oil in the tanks is tested on a daily basis to ensure there is no deterioration. Flavours are checked for salt and moisture and must be within agreed microbiological standards. The oil is checked at regular intervals to ensure that its quality is being maintained. There is an automatic moisture system whereby the crisp moisture

  • Word count: 346
  • Level: University Degree
  • Subject: Business and Administrative studies
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In manufacturing companies, the medium & long term is usually static comparing to short term (more dynamic).

(i) Introduction: In a manufacturing environment, in order to meet customers' needs to maintain our competitive advantage & market positioning, and also give an accurate and relatively certain forecast of our business, we use operations planning to calculate and schedule our medium & long term production activities(aggregate planning) and short term production activities, such as detailed work plan for individuals and /or collective production resources, for instance, in manufacturing environment, machines, labour ,departments(operations scheduling.) In manufacturing companies, the medium & long term is usually static comparing to short term (more dynamic). It is difficult to compensate short term mistakes, which may lose customers loyalties, lose market share. Internally speaking, it will make chaos in different departments and their plans will be re-scheduled. In order to avoid this, we need different information when giving operations planning for a batch production in the organisation. Cause production control can only act upon the information that it receives. (Muhlemann, 1992, production and operations planning), so more precise information we can get, more flexible and reliable we can schedule production. Information requirement: The required information is similar for scheduling in manufacturing Includes both in Demand and Availability * Standard processing or

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  • Level: University Degree
  • Subject: Business and Administrative studies
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Price Elasticity

Price Elasticity "Have U.S. Drivers Reached Filling Point of No Return?" by Justin Lahart "Airlines Try Business-Fare Cuts, Find They Don't Lose Revenue" by Scott McCartney While price is the strongest factor affecting demand, there are several factors that heavily influence the price elasticity of demand. Inelastic products are much less resistant to affects from price increases, allowing managers the flexibility to raise prices with little to no concern for losing sales. On the contrary, elastic products are highly vulnerable to and influenced by fluctuations in price. The elasticity of a product can change over time, affecting firms and industries that utilize that product. "Have U.S. Drivers Reached Filling Point of No Return?" by Justin Lahart and "Airlines Try Business-Fare Cuts, Find They Don't Lose Revenue" by Scott McCartney discuss the affects of changing elasticity in gasoline and airplane tickets, respectively. The articles highlight the number of substitute goods, the percentage of a consumer's budget spent on a product, and the time period that the product is under construction as strong influences on the price elasticity of gas and airplane ticket prices. The price of gasoline has begun to show a shift from heavily inelastic to more elastic in recent history. Our textbook, Economics for Managers, discusses the affects of the inelasticity of gasoline

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  • Level: University Degree
  • Subject: Business and Administrative studies
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Polar Ices questions: Explain why Polar Ices needs to build up stocks in the early part of the year

Polar Ices Q. 2. [a] (i) Explain why Polar Ices needs to build up stocks in the early part of the year. (4 marks) Q. 2. [a] (ii) State and explain three likely effects of the company building up stocks. (6 marks) Q. 2. [b ] (i) Explain the meaning of the term "Just in Time production". (3 marks) Q. 2. [b] (ii) Discuss whether Polar Ices should switch to Just in Time production. (8 marks) Q. 2. [c] The managing director has thought about batch production of chocolate in the winter months. Would you advise him to do this? Justify your answer. (9 marks) . . . . . . . . . . . . . . . . . . . . . . . . .. . A. 2. [a] (i) The demand for Polar Ices' products are concentrated in the summer months and the firm currently only has the capacity to produce 140,000 units per month - which is insufficient to meet their period of peak demand, unless they build up stocks of finished products earlier in the year. These stocks can then be used during the summer months to supplement the monthly output from the plant. A. 2. [a] (ii) One effect would be that the holding of finished products as stock also allows Polar Ices to react to any sudden and unexpected increase in demand (e.g. as might happen if there were an unusually warm Spring). A second effect could be a detrimental effect on the firm's cash flow position. Holding stock is costly (for a number of reasons)

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  • Level: University Degree
  • Subject: Business and Administrative studies
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Activity Based Costing & The NHS

Activity Based Costing & The NHS Financial Analysis - (MN2007) Assignment 2 . Introduction As the Management Accountant of a local NHS hospital I am going to write a report for the senior management team at the hospital that analyses the issues raised in the view attributed to Gordon Brown. It is difficult to assume which allocation approach the hospitals have used, but I am going to describe the Traditional Costing approach and the Activity Based Costing approach, which I will describe in more detail. 2. The Definition of Activity Based Costing Activity Based Costing (ABC) is a 'costing method' (Fleming & McKinstry, 1998: 216), which recognises that costs are incurred by the activities, which take place within the organisation, and for each activity a cost driver may be identified. Those costs, which are incurred or driven by the same cost drivers, are grouped together into cost pools and the cost drivers are then used as a basis for changing the costs of each activity to the product. 2.1 Cost Pools A cost pool is a collection of costs, which maybe 'charged to products' (Bendry, Hussey & West, 2001: 465) by the use of a common cost driver. Examples of costs pools are the power, material handling, material receipt, and production planning, sales administration, get-up cost and buying. 2.2 Cost Drivers A cost driver is any activity or series of activities, which

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  • Level: University Degree
  • Subject: Business and Administrative studies
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Using indifference curve analysis, derive a negatively sloped demand curve.

Maria Dimech Group 2 25th January 2005 A) Using indifference curve analysis, derive a negatively sloped demand curve. An indifference curve is a line that shows all the possible combinations of two goods between which a person is indifferent. In other words, it is a line that shows the consumption of different combinations of two goods that will give the same utility (satisfaction) to the person. The basic assumption about tastes in indifference curve theory is that of a diminishing marginal rate of substitution: the less of one good and the more of another good the consumer has, the less willing he or she will be to give up some of the first good to get more of the second. The aim of indifference curve analysis is to analyse how a rational consumer chooses between two goods. In other words, example how the change in the wage rate will affect the choice between leisure time and work time. For instance, in the figure above, the indifference curve is I. A person would receive the same utility (satisfaction) from consuming 4 hours of work and 6 hours of leisure, as they would if they consumed 7 hours of work and 3 hours of leisure. The shape of the indifference curve implies that indifference curves are negatively sloped and convex to the origin; thus if you are looking at the curve from the origin it will be bowed in. It is telling us how much hours of leisure we are

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  • Level: University Degree
  • Subject: Business and Administrative studies
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Demand and Supply Analysis for Mars Bar

Demand and Supply Analysis for Mars Bar Section 1 a. There's a worldwide shortage of sugar due to unfavorable weather conditions in the major growing regions. A shortage in the production of sugar will determine the amount of the Mars bar produced. This is because the unfavorable whether conditions are affecting the production of sugar. The supply of Mars bar depends on the price of the factors of production which in this case are affected by the bad weather. Weather conditions are part of the factor of the production of the Mars Bar because without proper land for the production of sugar, which is an important ingredient to produce it, the supply of the Mars bar will also be affected. For being limited, due to the weather, the price of sugar will consequently increase. Weather Condition? --> P (sugar)? As a result of the rise on the price of the factor of production (sugar) as an ingredient to produce the Mars bar, the Supply for the main product will fall. P (sugar)? --> S (Mars Bar) ? With the aid of a graph, the rise on the price of sugar produced a shift on the quantity supply of Mars bar is shown below: By shifting to the left, away from the equilibrium point (Qe) it represents that there was a decrease on the supply (S1 to S2). If the supply goes down, it will also affect the price of Mars Bars (P1) which goes up, becoming P2, as demonstrated on

  • Word count: 1280
  • Level: University Degree
  • Subject: Business and Administrative studies
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The society we live in today is clearly highly consumptive.

The society we live in today is clearly highly consumptive. By this I mean we consume mass produced commodities in abundance. We drive cars, use microwaves, listen to CDs, wear GAP khakis, eat packaged foods, live in pre-fab houses, watch Sony TVs, burn fossil fuels, and brush our teeth with Colgate (tartar control). We buy to fulfil our needs: basic and not-so basic. We are a consumer society; we buy, use, and discard to survive. [Although survival is rarely the impetus behind consumer purchases.] We are immersed in a consumer culture which eschews a dependency and faith in the commodity market like no other; it's an entire way of life -- we even define ourselves in terms of consumption. ("How many have you got?") Indeed, consumption has become a cultural ideal. Stuart Ewen summed it up beautifully when he noted that, "the commodity system enjoys a kind of passively accepted legitimacy as the universal arena within which most human needs are to be met..."(p.187 Captains of Consciousness). The culture of consumption is now the prevalent cultural form. It wasn't always like this. Before the days of mass production and ubiquitous industry, most people sustained themselves through farming, a system of barter, and a fairly simple monetary market - there was no omnipresent consumer market. People produced many of the goods they used, themselves. Handcrafted, or machined consumer

  • Word count: 1861
  • Level: University Degree
  • Subject: Business and Administrative studies
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Can vertical integration be explained entirely by transaction costs? Discuss the normative implicati

Can vertical integration be explained entirely by transaction costs? Discuss the normative implicati The emergence of the "New Institutional Economics" led to a revival of the efficiency explanations of institutions. The theory of transaction costs, in particular, is said to provide a "scientific" explanation of the existence, size and hence degree of vertical integration (VI) of firms. Furthermore, as we shall see, this theory also seemed to imply that the level of VI is the optimal one with obvious implications for the appropriate government policy towards them. TC have been described by Arrow as the costs of running the economic system but besides that no clear definition has been provided. TC can be classified as "ex ante" which include search and information costs and the bargaining, deciding and drafting of a contract and as "ex post" which refer to the execution, policing and enforcement costs of this contract. TC have been said to arise for a variety of reasons but uncertainty and imperfect information are probably the most important factors to the extent that some (such as Dalhman) have even argued that in fact all TC are due to uncertainty. In any case, as Williamson pointed out, imperfect information is a problem mainly because of two behavioural traits: bounded rationality and opportunism. Bounded rationality, a concept of H. Simon, has been defined as a

  • Word count: 2358
  • Level: University Degree
  • Subject: Business and Administrative studies
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