The relationship between marginal cost (MC) and marginal revenue (MR) is fairly easy to see, marginal cost is the extra cost from the production on one or more units of a particular item verses marginal revenue is the change in total revenue from the sale of one or more units of a particular item. There is a principal that explains the relationship between the two best called the MR=MC rule, which states “that a firm will maximize its profit (or minimize its losses) by producing the output at which marginal revenue and marginal cost are equal, provided product price is equal to or greater than average variable cost” (McConnell, 2012). Marginal revenue is the change in total revenue related to one or more units of a particular item, where as total revenue is the total dollar amount gained for all items a company sells. Marginal revenue is calculated by dividing the change in total revenue by the change in sales. So, when marginal revenue is equal to marginal cost, no additional profit will be made from increasing units. Total revenue is calculated by adding the economic profit, implicit costs and explicit costs or the accounting profit plus that accounting costs (explicit costs only). Marginal cost is the added cost for a company to make one or more units of production. Total cost (TC) is the combination of all variable and fixed cost expenses at various levels of production. The total fixed costs are steady costs that are not dependent on the level of output and remain the same no matter how much product is produced verses that variable total costs increase or decrease depending on the number of items produced in a particular time period. To calculate marginal cost, you would need to divide the total cost by the total output. “Marginal costs are costs the firm can control directly and immediately. Specifically, MC designates all the cost incurred in producing the last unit of output. Thus, it also designates the cost that can be “saved” by not producing that...

...Marginal Analysis in a Monopolistically Competitive Market Structure
EGT1 Task1
Abstract
Company A is a producer of widgets in a monopolistically competitive market structure. It is projected that as more widgets are sold, Company A must offer a discount on each one to ensure adequate demand. Due to limited supplies and the cost of equipment maintenance the cost will rise as more widgets are produced.
Revenue and cost at different output levels for the year:
Task A. Profit Maximization
Profit maximization is a process used to determine which combination of product price and output level will yield the greatest profit. There are two approaches commonly used in profit maximization.
Total Revenue to Total Cost
This first approach takes our total revenue, or all of the sales of our widgets, and subtracts the total cost and focuses on maximizing the difference.
The total revenue or TR may be calculated by multiplying the price by the quantity sold.
The total cost includes all of the fixed costs plus the variable costs. This covers the cost of all factors in the production of the widgets.
Marginal Revenue to Marginal Cost
This alternate approach to profit maximization involves subtracting the marginal cost or MC from the marginal revenue or MR. The goal here is to find the intersection of MR and MC. The maximum total profit would be where MR = MC.
Marginal revenue is the increase in revenue from one...

...EGT1: Task1
A) 1. When determining how much of a profit a company will make, one has to look at a few deciding factors. Two of those are total revenue and total cost. Total revenue is the sum of a company’s sales of a particular product. Total cost is how much a company pays for production which includes fixed and variable costs. After total cost is deducted from the total revenue, the money left over is a profit. The goal of most is to maximize profits the best way possible. Total revenue and cost are very important when it comes to profit maximization because they are the guidelines of production. Total revenue is found by multiplying the price of the unit by the quantity produced and when compared to the total cost of each unit produced, a company can find out how many units to produce that would better maximize profits. Profit maximization is found by looking at the difference between the total revenue and total cost and determining which has the greatest profit.
2. Profit maximization can also be determined by looking at the marginal revenue to marginal cost approach. Marginal revenue is the change in total revenue resulting from the sale of an additional unit of product. Marginal cost is the cost of producing that one extra unit. To find if profits are maximized, marginal cost is subtracted from marginal revenue. Profit maximization occurs when marginal revenue exceeds marginal cost. This approach is...

...EGTTask 2:
A. Price elasticity of demand (Ed) is used to determine if percent change price increases
will percent change quantity demanded decease. In price elasticity of demand (Ed)
there are three possible coefficient categories that can result; elastic, inelastic and
unit elastic. Key components to remember when determining coefficient category, the
threshold is set at one, there are only absolute values, no negative numbers, and the
coefficient can only be categorized as elastic, inelastic and unit elastic. To determine
if the coefficient is elastic, inelastic or unit elastic they would have the following
characteristics.
When price elasticity of demand (Ed) is elastic the coefficient will be greater than one
(Ed > 1). When a percent price change occurs quantity demanded responds strongly
and there will be a large change in quantities consumers purchase. There is price
sensitive in this scenario.
If price elasticity of demanded (Ed) is inelastic the coefficient will be less than one
(Ed < 1). When a percent price change occurs quantity demanded doesn’t respond
strongly and there’s a small change in quantities consumers purchase. There a weak
price sensitive in this scenario.
Lastly, if price elasticity of demanded (Ed) is unit elastic the coefficient will be equal
to one (Ed = 1).Whenever there is a percent change in price there is an equally
matched percent change in quantity...

...revenue and total cost. The total revenue/total cost approach depends on the idea of profit equals total revenue minus total cost. It focuses on maximizing the difference to achieve profit maximization. Profit maximization is greatest when marginal revenue and marginal cost cross. The distance between total cost and total revenue are highest at this point.
B. Marginal revenue is the increase in revenue from a sale of one additional widget. Marginal revenue is calculated by dividing the change in total revenue by the change in output quantity.
1. Marginal revenue in this situation increases when one (1) widget is sold. After the one (1) widget is sold as the quantity increases the marginal revenue decreases by ten (10).
C. Marginal cost is determined by taking the change in total cost and dividing it by the change in quantity.
1. Marginal cost stays constant between widget when the output quantity is one (1) and output quantity is two (2). The marginal cost increases by 10 then stays constant when the output quantity is 3 and 4. The marginal cost increases by 10 when the output quantity is 5. Then the marginal cost increases by ten each time when the output quantity is 6, 7, 8, 9, 10, 11,12,13,14, and 15.
D. The profit maximization occurs when the output is 7 and 8 where the profit is $540.00. The profit maximization decreases after the output item 8 where the total...

...Task 309.1.1.06
A. Two methods of profit maximization that companies utilize are the total revenue to total cost approach and the marginal revenue to marginal cost approach. To attain their goal of achieving the highest level of profit, Company A uses these methods to determine the appropriate output level to achieve their goal. Both methods arrive at the same level.
In the first approach, Company A first determines its total revenue by multiplying the number of widgets sold by the price of the widget. Next it determines its total cost which comprises of the sum of all costs including fixed and variable costs. Company A’s profit is then calculated by total revenue minus total cost. However, in an effort to maximize their profit, Company A would look to produce it’s widgets at the output level where the margin between total revenue and total cost is the largest resulting in the greatest profit.
In the second approach, Company A first determines its marginal revenue which is the total change in revenue resulting from selling one additional widget. Next it determines its marginal cost which is the total change in cost for producing that additional widget. In an effort to maximize their profit, Company A would look to produce it’s widgets at the output level that is closest to the point where marginal revenue is equal to marginal cost.
B. The formula for Marginal Revenue (MR) is the Change ( ) in Total Revenue (TR)...

...Profit maximization from the total revenue to total cost approach is at the point of the largest difference between total revenue and total cost.
Profit maximization from the marginal revenue to marginal cost approach is where marginal revenue equals marginal cost.
The calculation used to determine marginal revenue is the change in total revenue divided by the change in quantity. In this scenario, marginal revenue decreases by $10 at every additional increment of widget production.
The calculation used to determine marginal cost is the change in total cost divided by the change in quantity produced. Marginal cost increases by $10 at every increment produced in this given scenario.
Profit maximization from the total revenue to total cost approach would have Company A producing no more than seven widgets. According to the total revenue to total cost approach, revenue is maximized where the difference between total revenue and total cost is the largest. At seven widgets, the difference is at its apex of $540. At eight widgets the difference remains the same $540 but costs more than seven widgets to produce and is thus redundant. At nine widgets the difference is at $520 and the difference continues to decline for each subsequent widget produced.
In the marginal revenue to marginal cost approach (where profit maximization occurs when marginal revenue equals that of marginal cost), profit maximization would have Company A’s production stop at eight widgets. It’s at...

...EGTTask A
Starting a business is a delicate process that can be easily ruined if the owner doesn’t know how to maximize it profits. In order to make sure the business is obtaining the highest level of return the owner must ensure that he understands the concept of profit maximization. This essay will explain the relationship between marginal costs and revenue to give the firm a better understanding in profit maximization.
To better understand how to maximize revenue the firm must first comprehend marginal revenue and how it relates to total revenue. Marginal revenue is the change in total revenue from the sale in one additional unit of product (McConnell, Bruce, Flynn, 2012). For example, two lamps that sell for six dollars total revenue is twelve dollars. This answer is found by using the formula quantity x price. If an additional lamp was produced, the marginal revenue would show if there was any change to the total previously found. To find the marginal revenue one must divide the total revenue by the quantity of items sold. Fortunately, in a competitive market the marginal revenue will also equal the price of the good.
Another area a business owner should be proficient in is marginal cost and how it relates to total cost. Marginal cost is the increase in total cost, which is variable and fixed costs combined, as one more unit of output is produced (McConnell et al., 2012). They are related because in order to know if marginal costs...

...Economics and Global Business Applications
Task 4
This report will detail cross-cultural issues that may be faced when a firm does business within the borders of the highly populist country. With the emergence of the WTO (World Trade Organization) international trade drastically increased allowing countries to participate in foreign trade in turn raising the GDP (Gross Domestic Profit) and exposing their products to a broader audience. Not only are countries able to trade standard goods and services, they are able to expose specialty and cultural products across the globe giving an insight to daily life’s of it citizens and rich history. Although Trade Agencies such as the WTO have greatly expanded the reach and created a somewhat level playing field they are still facing barriers such as government policies, economic conditions, tax’s/tariffs, and cross cultural issues.
Korea, is beginning to challenge the established economies as it grows into a super power. In a unprecedented increase the Asian markets are under growing massive economic and social changes out pacing other established markets. Over the last forty years Korea’s economic growth has shown substantial growth. Many statistical analysis show the Korea is on track to overtake major economies including the United States, over the next couple decades growing its GDP to the become the worlds largest economy. (Anusorn, 1997)
There are several substantial opportunities and incentives with...