In the next chapter we learn how sellers set the prices in which we pay for an item, why things cost what they do and not what they are worth. The key to prices are sellers that can sell their products as close to the cost of making the item. In a regular market, prices are the key. Businesses cannot afford to charge a higher price, customers are normally looking for a lower price and the lower the better, in today’s economy. Many customers ask the question, “What affects prices?” We learn that things happen beyond the sellers’ and buyers’ control to raise and lower prices in today’s market.
With reference to extract one, assess the likely effect of a fall in the sterling exchange rate on the UK’s deficit in the trade of goods and services. (12 marks) A fall in the exchange rate of 25% means the pound becomes weaker, this means imports are more expensive, and exports are cheaper. As a result of this, this may mean a large increase in demand for exports and a considerable decrease in demand for imports, therefore decreasing the deficit of the balance of payments in the UK as predicted. However, if the goods we are importing and exporting are inelastic, meaning they have a less than proportional response to price, an increase in the price of imports, and a decrease in the price of exports may not have a great effect on the trade of goods and services and so therefore not improve on the deficit the UK holds. As stated in extract 1, it tells us that the goods we import are not made in the UK and so makes it impossible to replace the imports, therefore meaning that we still have to import goods, despite the high prices due to the low exchange rate of sterling.
When it comes to the Western Washington State division, it used job services to recruit people and was unsuccessful with the results. The job service was more expensive method than the media, referral, or kiosk. The better results came from using the referral and kiosk method. The referrals method had more applicants hired and was the most expensive than the others. The kiosk was the other method that had good results but was also expensive when you see the total cost.
Price discrimination also shows signs of oligopolistic firm , as prices are set for different genders, age, time, season, due to lack of competition and choice. The firm is then able to charge a higher price to the group with more price inelastic demand and lower
A few of the most significant advantages of outsourcing include: Cheaper Labor Possibly the most well known reason to consider outsourcing is to access cheaper labor. Workers in developing countries are paid far less than workers in developing countries due to the lower cost of living. Often these workers are not unionized as well, which further helps with cost cutting. Cut Operating Costs Even though your outsourced work must be paid for, often the costs are cheaper than if your company performed the operation itself. Lower salaries are a part of this benefit, but it goes much deeper.
Burden cost in test rooms would be charged based on Machine Hours. Tech/Admin pool would be charged at direct labor hours The existing system failed because there was only one rate being used to calculate overhead, and this rate was solely based on direct labor hours. Some products require much more machine hours then direct labor hours. As you can see from the different breakdowns the machine hours are very costly, and as we automate things even further the overhead will not be assigned correctly. Something that requires much more machine hours will appear to have a lower cost, when in fact it could be costing the company a great deal more.
US and European importers of the cameras through unauthorized channels are selling at much lesser price than authorized distributors. These unauthorized distributors in Europe and US are free riding on the investments done by authorized distributors on servicing, advertising, display and other marketing investments. All that is necessary for gray marketers to sell at lesser prices is that the value added by authorized distributors exceeds the shipping cost of diverted products entering US and Europe markets. 1 Major problems arising due to existence
Externalities cause deadweight loss which can lead to market failure. Businesses can make more money if they can internalize the externalities. Externalities can be internalized if the transaction cost of the business is low. “Transaction costs are the costs of identifying and bringing buyers and sellers together, bargaining and drawing up a contract”2and it is relatively high for department stores like Galeria Kaufhof in comparison to stores like H&M. Similarly, the transaction cost for stores such as H&M is more than that of the jewelry shops but less than the department stores.
costs were recognised as a percentage of sales revenue. Potential problems with the old cost system Selling and admin. costs were expensed rather than allocated to product lines and customers, making the company bear all the costs. Some customers placed heavy demands than others but resources were still being equally allocated across all products