Economics and Sony
Economics assessment outcome 1
As Sony begins production of their new product, PlayStation move, define the following costs and explain the short run influences on each. Illustrate your explanation of each cost with a diagram.
1a.As Sony begins the production of their new product, the total cost of the firm is the total cost incurred in the production of their output, Sony total cost will include their variable and fixed cost, an example of variable cost is the raw materials. The variable cost of Sony is the cost in line with the production and sale of a product. While the fixed cost of Sony are those cost that do not change even if output increases or decreases. Example of this is software, design and development. In the short run, the cost of producing MOVE will increase at a declining rate because of the increase in an extra output due to an increase in one unit incurred in the use of its variable inputs, and therefore rise at an increasing rate due to decreasing marginal returns and the law of diminishing marginal returns. The total cost of the production of MOVE is influence by the variable cost because Sony total fixed cost is not subject to change even though there is a change in production. Sony total cost diagram will take the shape below because the shape will show the origin of the companies production level and its profit maximisation with this curve we will be able to determine the degree of and the level of market control Sony have.
1b.Average cost: this is the total cost of production per unit of output, average cost of Sony is its total cost divided by its unit of production. Average cost will take the U shape because fixed cost is incurred and marginal cost rise due to diminishing marginal production. In the short run, average cost fall initially at the start, it furthers reaches a point then it begins to increase, the average cost will fall at the beginning of the production of MOVE because the fixed factors of Sony is not subject to change, it
As Sony begins production of their new product, PlayStation move, define the following costs and explain the short run influences on each. Illustrate your explanation of each cost with a diagram.
1a.As Sony begins the production of their new product, the total cost of the firm is the total cost incurred in the production of their output, Sony total cost will include their variable and fixed cost, an example of variable cost is the raw materials. The variable cost of Sony is the cost in line with the production and sale of a product. While the fixed cost of Sony are those cost that do not change even if output increases or decreases. Example of this is software, design and development. In the short run, the cost of producing MOVE will increase at a declining rate because of the increase in an extra output due to an increase in one unit incurred in the use of its variable inputs, and therefore rise at an increasing rate due to decreasing marginal returns and the law of diminishing marginal returns. The total cost of the production of MOVE is influence by the variable cost because Sony total fixed cost is not subject to change even though there is a change in production. Sony total cost diagram will take the shape below because the shape will show the origin of the companies production level and its profit maximisation with this curve we will be able to determine the degree of and the level of market control Sony have.
1b.Average cost: this is the total cost of production per unit of output, average cost of Sony is its total cost divided by its unit of production. Average cost will take the U shape because fixed cost is incurred and marginal cost rise due to diminishing marginal production. In the short run, average cost fall initially at the start, it furthers reaches a point then it begins to increase, the average cost will fall at the beginning of the production of MOVE because the fixed factors of Sony is not subject to change, it