Spending by the consumer sector is the driving force in the US economic system. Although the business and government sectors make a considerable contribution to the success of

There will be two discussion questions listed below. By the due date assigned respond to one of the discussion questions and submit your response to the Discussion Area. Use the lessons and vocabulary found in the reading. Support your answers with examples and research and cite your sources using APA format.

Discussion Question 1:

Spending by the consumer sector is the driving force in the US economic system. Although the business and government sectors make a considerable contribution to the success of the economy, it is the spending by the consumer or household sector of the economy that determines prosperity or recession in the economy.

Do you agree or disagree with this argument?
Why or why not?
How has the spending behavior of the government sector changed over the past decade, and what effect had these changes had on the economy?
Justify your answers

Discussion Question 2:

Start reviewing and responding to at least two of your classmates' postings as early in the week as possible. Participate in the discussion by asking a question, providing a statement of clarification, providing a point of view with a rationale, challenging an aspect of the discussion, or indicating a relationship between one or more lines of reasoning in the discussion. Please post peer responses by the end of the week.

Week 1 Q 2

Melissa Duling posted May 30, 2023 11:46 AM

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Decision making in a business environment requires an understanding of cost and revenue data. This includes an understanding of marginal and incremental analysis, as well as basic cost and revenue relationships. Explain how a basic understanding of these concepts, as well as of managerial economics, can enhance the managerial decision-making process. Justify your answer. With any business, the goal is to be profitable and to be sustainable through the ups and downs of the market and the needs of the consumers. Managers need to be able to evaluate the benefits and the risk that may be involved with decisions they make for the business. The evaluation should include not only the short-term but also what impact will the decision have over the long haul for the business, how will the decision help the business meet their long-term goals, and what are the positive and negatives for the business (South University, 2017). Leaders and managers need to have a good understanding of the costs and the revenue of the business, so they are able to make good decisions about the products and services of the business, as well as evaluate the benefits of any new projects. Managers can have a better understanding of the profitability for the business, which has a direct impact on the sustainability of the business. Managers can also use this information to identify areas of opportunity to cut cost, determine how to prioritize projects, and have a better understanding of risk that may be associated with investment opportunities (Anonymous, 2022). Managers need to have a good understanding of marginal analysis, so they are able to identify the cost and the benefits of certain business projects, investments, and decisions for the organization. The goal is to ensure that the benefit or revenue outweighs the risk or the revenue. Marginal analysis goes beyond projects and potential investments, it is also important when budgeting for potential new hires. If the organization is in need of more workers, will the benefit of hiring that person for increased production or performance be worth the cost, and will the organization see a positive return on the hiring. These are all questions that can be answered with marginal analysis. In any organization leaders and managers need to understand the importance of marginal analysis, and it is also a good idea to ensure that employees also have a good understanding, so they can better understand why some decisions are made (Tafoya, 2016). There will be times when there is more than one option that is presented to managers of a business and they will need to determine the best option, and there are times when an alternative will need to be considered. Incremental analysis gives managers the information they need to pick the best alternative, by reviewing the cost and the benefit of each alternative and then deciding which of the alternatives will be the best option for the business. Incremental analysis offers mangers a way to evaluate the most cost-effective option, how to use their resources effectively and how to decrease the risk and cost that may be associated with the decisions that are being made (Froeb et al., 2023). Managerial economics uses economic principles and process help managers make good decisions regarding business and to provide a guideline to better understand the importance of market conditions, how to evaluate data to make a decision that can have a positive impact on the profit and sustainability of the business, and how managers can use their resources to have the most impact on their business. Having a good understanding of cost and revenue, marginal and incremental analysis and managerial economics provides managers with the knowledge and tools they need to lead their employees, their business and to make decisions that result in a higher profit margin and lower risk.

References

Anonymous. (2022). Cost and revenue information for operational decisions. In Cost accounting. WORLD SCIENTIFIC. https://doi.org/10.1142/9789811264856_0009

Froeb, L., McCann, B., Shor, M., & Ward, M. (2023). Managerial Economics: A Problem Solving Approach (6th ed.). Cengage Learning Inc. https://doi.org/https://digitalbookshelf.southuniversity.edu/reader/books

South University. (2017). Goals of a Company [Lecture]. https://doi.org/https://myclasses.southuniversity.edu/

Tafoya, D. W. (2016). Profiling the marginal organization: A framework for operational analysis. In (Ed.), Marginal organizations. Palgrave Macmillan US. https://doi.org/10.1057/9781137361134_2

Week 1 Q 2

Melissa Duling posted May 30, 2023 11:46 AM

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References

Anonymous. (2022). Cost and revenue information for operational decisions. In Cost accounting. WORLD SCIENTIFIC. https://doi.org/10.1142/9789811264856_0009

South University. (2017). Goals of a Company [Lecture]. https://doi.org/https://myclasses.southuniversity.edu/

Tafoya, D. W. (2016). Profiling the marginal organization: A framework for operational analysis. In (Ed.), Marginal organizations. Palgrave Macmillan US. https://doi.org/10.1057/9781137361134_2

Supply and Demand.html

Supply and Demand

There are several basic relationships in economic theory, such as supply and demand or costs and revenues. A market is a place where potential buyers and sellers come together. All of them have their own perspectives on the market and differ in how much they are willing and able to buy or sell. The mathematical relationships that express these behaviors are called supply and demand functions.

The demand side of the market shows how buyers behave. For most goods and services, as the price decreases, the demand for the goods increases. This behavior is described by the Law of demand. This function shows that as price changes, the quantity demand moves in the opposite direction.

The supply side depicts how the sellers or suppliers of a good perceive the market. They see the same prices as the buyers but react to these in the opposite manner. As the prices increase the quantities supplied by sellers increase and vice versa. As these factors change, managers must be able to incorporate these changes into the supply function and the decision making process.

The market for goods and services are rarely in a state of balance and constantly changes. Both buyers and suppliers in the market aspire to an ideal situation called market equilibrium, the point at which supply and demand functions are equal. It is the point at which buyers and sellers agree as to the amount that will be sold as well as the price that will be paid.

Comparative Statics Analysis.html

Comparative Statics Analysis

“Managers typically control a number of the factors that affect product demand or supply. To make appropriate decisions concerning those variables, it is often useful to know how altering those decisions affect market conditions. Similarly, the direction and magnitude of changes in demand and supply that are due to uncontrollable external factors, such as income or interest rate changes, need to be understood so that managers can develop strategies and make decisions that are consistent with market conditions” (Hirschey, 2009, 133).

“One relatively simple but useful analytical technique is to examine the effects on market equilibrium of changes in economic factors underlying product demand and supply. This is called comparative statics analysis. In comparative statics analysis the role of factors influencing demand is often analyzed while holding supply conditions constant” (Hirschey, 2009, 133).

“Similarly, the role of factors influencing supply can be analyzed by studying changes in supply while holding demand conditions constant. Comparing market equilibrium price and output levels before and after various hypothetical changes in demand and supply conditions has the potential to yield useful predictions of expected changes” (Hirschey, 2009, 134).

Reference:

Hirschey, M. (2009). Fundamentals of managerial economics, (9th ed.). Boston, MA: Cengage Learning.

A surplus refers to the demand falling short of the supply. A shortage, on the other hand, refers to the demand exceeding the supply. Management must be aware of the market imbalance and make adjustments accordingly. The most time efficient solution is to increase the price in the case of a shortage or decrease price in the event of a surplus.

Goals of a Company.html

Goals of a Company

What is the primary goal of a company? Is it profit? Business companies exist to earn profit, even though there are other goals. In most cases, if at least a normal profit is not earned, companies dissolve and owners place their wealth in investments that have the potential of giving them the desired returns. Managers need to consider various questions regarding the benefits and costs of a particular activity or investment before they make any decisions for the company.

Before making a decision for a company, managers must try to answer various questions that address long-term and short-term considerations. Your decision must address the following questions:

Will the particular activity benefit the company only in the short term?
Does this decision have an impact on the company’s success in the long term?
Will the particular activity have a negative impact in the short term and positive effects only in the long term?

Managers must also consider risk in the decision-making process. Two investments may show overwhelming profits. However, it is unwise to compare results of two investment possibilities with two different chances or probabilities of being realized.

So what should be the ultimate goal of a company? It is to maximize its value. In other words, the company should try to maximize profits and minimize risk to the owners. These are long-term goals of a company, as are most goals of any company, because companies rarely plan to exist for just a short duration.