Users of Accounting Information
People both inside and outside and organization rely on accounting information to help them make business decisions Accounting-practice of measuring, interpreting, and communicating financial information
Product and Branding
November 8, 2006
Product-bundle of physical, service, and symbolic attributes designed to enhance buyers' want satisfaction.
Included in this broad definition are considerations of package design, brand names,
Market Structure Characteristics
Perfect competition -Many powerless
Monopolistic Competition - Many firms
sell similar products; production decision of
any single firm does not directly affect the
sales or selling price of other firms (e.g., gas
A firm that produces the entire market supply
of a particular good or a service.
In A Monopolistic market there is:
1. A single seller
2. A product with no close substitute
3. Entry into the industry is barred.
Why Monopoly Does Arise?
A market in which many firms produce
differentiated goods or services but each
maintains some independent control of its
In Monopolistic Competition:
1. There are a large number of firms
A market with only two sellers is called a
1. Products are identical
2. Each firm will act as if its
rivals output is fixed.
The EQUILIBRIUM PRICE for the industry
will be less than the Monopoly price but
higher than the price resulting f
Internal Labor Markets
The concept of Internal Labor Markets was
first developed in economics in the early
1970s by Peter Doeringer & Michael Piore.
The internal labor market is a complex set
of administrative procedures and rules
governing the allocati
New York Stock Exchange
The NYSE lists stocks for over 3,000
corporations, with a total market value of $12
Before a corporations stock is approved
for listing on the New York Stock
Exchange, the firm must usually mee
Rent, Interest & Profit
Rent: Pure economic rent is the income
earned by a factor of production that is in
completely INELASTIC SUPPLY.
INTEREST: The price paid for the use of
Profit: Is the difference between total
REVENUES and TOTAL COSTS.
Mercantilism is the name given to the
economic system that arose in western
Europe in the 1500s during the period in
which modern nation states were
emerging from feudal monarchies.
The Central Question
How could a nation regulate its domes
David Ricardo & the Concept of
Comparative Advantage is the ability of a
country to produce a specific good at a
lower opportunity cost than its trading
. A country should specialize in what it is
relatively efficient at p
Countries are classified according to three
income levels: high, middle, and low.
Per Capita Income classifications:
Low Income $725 or less.
Middle income.$ 726-8955
High income .$ 8956 or more.
The New Economy
Professor Al K. Rashid
Is history capable of repeating
In 1967, futurist Herman Kahn
predicted that the 1960s boom
would be timeless
That boom involved low
unemployment, high producti
The WILLINGNESS and ABILITY to work
specific amounts of time at alternative wage
rates in a given time period.
Demand for Labor:
The quantities of labor employers are
willing and able to hire at alternative wage
rates in a given time
Profit Maximization By Firms
Goals of Firms: Firms are assumed to be
profit-maximizing or profit-oriented.
Decisions on prices, output, inputs, and
other factors consistently reflect a striving
for higher profit.
Goals of Firms
According to Herbert Sim
November 20, 2006
Management Information Systems
Management Information System (MIS)-organized method for providing past, present, and projected information on internal operations as well as external intelligence to support
PRICING AND SELLING
November 13, 2006
Definition Profit = Revenue - Expenses Market Share - listed as %age Breakeven Point How to price? 2 strategies:
Skimming pricing Penetration pricing
Graphs & Equations in
The purpose of using graphs is to illustrate a
relationship between two variables. For
example, to illustrate the correlation
between more study time and higher grades.
The graph is only a summary of empirical
ELASTICITY is a measure of the
responsiveness of one variable to another.
Five Elasticity terms:
1. ELASTIC (E > 1)
INELASTIC (E < 1)
(E = 1)
PERFECTLY INELASTIC (E = 0)
5. PERFECTLY ELASTIC (E=
Elasticity and Its Applic
The Cost Of Production
Production Function: A schedule or
mathematical equation showing the
maximum amount of output that can be
produced from any specified set of inputs,
given the existing technology.
Economic Cost &
Economic Cost: The
The Costs of Doing Business
The most important equation of any business
is: Total Revenue Total Cost.
Fixed Costs: Even when a firms output is
ZERO, it incurs the same fixed costs.
Examples of fixed costs are rent and
Variable Costs: These v
Mathematical relationship indicating the
rate of desired Consumer Spending at
various income levels.
C = a + byd
a= Autonomous Consumption
B=Marginal propensity to Consume
(change in C divided by byd).
The Economic Nature of the
The Classical Concept:
Firms are the economys basic units of
production. Firms transform inputs into goods
and services, and sell the latter to households
and firms with the objective of maximizing
According to A
The Business Cycle
Recession: recession can be defined as two
consecutive quarters of falling output.or a
period of declining real incomes and rising
Depression: A severe recession.
Three Facts about Economic
1. Economic fluct
Pricing and Price strategies
A price is the exchange value of a good or service.
The two primary types of new product pricing
1. Price Skimming: the strategy of charging the
highest possible price for a product during th
The Market System
Consumer Sovereignty: The authority of
consumers to determine what is produced
through their purchases of goods and
Private Sector: Household, business, and
the international sector.
Household: One or more per
Profits are a function of revenue and
Revenue is determined by the products
selling price and number of units sold:
Total Revenue = P X Q.Sold
Gross Profit Margin: the gross profit margin
equals the firms gross profit