Thomas Money Paper

Topics: Economics, Variable cost, Marginal cost Pages: 7 (2317 words) Published: May 28, 2013
Week Six_ Thomas Money Paper Business Proposal

Bobby Taylor

Economics 561

May 23, 2013
Aleksandr Kocharyan, PhD, instructor

Thomas Money Paper Business Proposal
It is very significant to comprise a business plan in the shifting world business to stay ahead. The changes in the economy will create or shatter the business. The reason to have a business plan for the organization is to restore or generate more profits for the business. In this paper I will review the existing services and goods business proposal of Thomas Money Services Inc. Elasticity of Demand and Market Structure

Thomas Money Service Inc. (TMS) has been in business since 1940. TMS started out as an end user funding company giving way loans for domestic wants. The company prolonged over the next five years by granting business loans, business acquirement financing, and business real estate loans. In 1946 executive made a choice to expand into gear financing. This proved very lucrative for the company. With the end of the World War II, society experienced increased demand for construction and forestry equipment. In 1951, the equipment financing subsidiary, Future Growth Inc. (FGI) purchased and equipment manufacturing company, which vertically integrated the subsidiaries operations.

TMS Inc has a monopolistic competition market; elasticity of demand is how much demand varies for manufactured goods in connection to a transformation in price. This transformation is measured as a percentage. For TMS Inc the elasticity is that it can offer the monetary support to business that desires to thrive and nurture. There are numerous different financial institutions that purpose the identical approach. Creating binds, such as these would be excellent method for the FGI to position itself separately and diminish elasticity. The substitutes give opportunity to the consumer by offering lower prices. To be thriving in the market the high elastic prices play an extremely significant role.

Over the next 67 years the company increased revenues and profits. Unfortunately, with the recent downturn in the American economy coupled with several natural disasters, FGI has for the first time experienced a decline in profits and was forced to lay off one-third of its workforce. Even though residential home sales have dropped the health care industry is still experiencing healthy demand. The idea of this paper is to give recommendations to TMS for increasing revenue achieving finest production levels, determining how predetermined and variable costs must be attuned to make best use of products and finally to identify methods to diminish costs. Increasing Revenue

Because of the economic decline FGI has repossessed more than 500 pieces of equipment. FGI has bundled the pieces together and has determined an average price for each piece. The present selling price is $ 1,732. At the price FGI could sell 182 units for an aggregate purchase price of $315,224. If FGI lowers the price to 1,634.3 they could sell 350 units for an aggregate purchase price of $572,005. Based on the data provided by TMS, the purchase price of $1,636.3 does not enable the FGI to unload the repurchased equipment, but it does generate the highest level of total aggregate revenue.

FGI could hold on to the remaining equipment to the health care sector, which is still experiencing strong demand. In addition, depending on how long TMS believes the downturn will continue management could also sell the remaining equipment for parts or simply hold onto the equipment. If TMS sells all its repossessed equipment and the American economy recovers. TMS may not have enough equipment on hand to service its customer base. Determination of the Profit-maximizing Quantity

To maximize profit, the marginal revenue gained from producing an additional unit of output must surpass or remain correspondent to the marginal cost of that equivalent unit. Based on the data provided by...
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