(b) Critically evaluate the Baumol model and examine its contribution to the genre of management models. Explain the economic significance of both the price elasticity of demand and rival price reactions in achieving the objectives. In your reply refer to and support your answer with case study material Baumol model and its contribution to the genre of management models In the world of business‚ management need to make lots of decision on daily basis. Those decisions will eventually affect company’s
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involved in the day to day running of the firm‚ and therefore their main desire is profit maximisation. In reality firms are most likely run by managers and not by the owners. Because of this there is a lack of goal congruence between the two. Baumol (1959) suggests that manager controlled firms are more likely to have sales revenue maximisation as their main goals rather than profit maximisation favoured by shareholders. He shows that there are several explanations for the managerial emphasis
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Managerial Economics August 15‚ 2007 The key points underpinning the economics of a profit maximizing firm Neoclassical model of the firm states that organization will have the main objective of maximizing its profit within a given period of time. Maximum profit was achieved at the output at which marginal cost is equal marginal revenue. There are several factors which need to be considered when talking about the profit maximizing firm: 1. The assumption of the profit maximizing firm is that
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perfect knowledge‚ single entity and rational logic. However‚ as illustrated by the principal-agency problem‚ managers do not usually make rational decision entirely like owners who take company interest as their sole basis for their decisions. Past examples have shown that managers do take their own personal goals and satisfactions as consideration in their decision-making. In addition‚ information gathering is not always perfect as managers do make decision by relying solely on the implicit knowledge
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is extensively used and highly useful for the purpose of cash management. As per the model‚ cash and inventory management problems are one and the same. William J. Baumol developed a model (The transactions Demand for Cash: An Inventory Theoretic Approach) which is usually used in Inventory management & cash management. Baumol model of cash management trades off between opportunity cost or carrying cost or holding cost & the transaction cost. As such firm attempts to minimize the sum of the
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Merger Types - Various Type of Merger A merger refers to the process whereby at least two companies combine to form one single company. Business firms make use of mergers and acquisitions for consolidation of markets as well as for gaining a competitive edge in the industry. Merger types can be broadly classified into the following five subheads as described below. They are Horizontal Merger‚ Conglomeration‚ Vertical Merger‚ Product-Extension Merger and Market-Extension Merger. 1) Horizontal
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TYPES OF ESSAY The Expository Essay The main function of the expository essay is to explain‚ or to acquaint your reader with something; it can be used to describe‚ explain or present some information. In order to write an expository essay‚ preparation and background research will be required. This will arm you with facts and information that will be subsequently conveyed to your reader. Expository writing will also require you to show understanding of the chosen topic – this is why many professors
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and lays. Some narrative poetry takes the form of a novel in verse. An example of this is The Ring and the Book by Robert Browning. In terms of narrative poetry‚ a romance is a narrative poem that tells a story of chivalry. Examples include the Romance of the Rose or Tennyson’s Idylls of the King. Although these examples use medieval and Arthurian materials‚ romances may also tell stories from classical mythology. Examples: You Fill My Days -Jack Ellison You fill my days with happiness
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the TYPE tab‚ under Types of pollution‚ check that Toxic is selected. Read the paragraphs on the right and bottom of the Gizmo. 1. What is toxic pollution? _____________________________ _________________________________________________ _________________________________________________ 2. What are some examples of toxic pollutants listed in the Gizmo? _____________________ ________________________________________________________________________ 3. Can you think of other examples of toxic
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Part A Sole Proprietorship: A sole proprietorship is a business owned by one person. It is the most frequently used form of business and most small businesses begin as sole proprietorships. It is the easiest and cheapest type of business to start. • Liability: A sole proprietor is financially accountable for all of the unpaid debts of the business. The sole proprietor’s business assets and liabilities and his or her personal assets and liabilities are the same. If the business were to go out
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