Market Systems Roy Combs Argosy University 10/28/2014 Author Note Information is academic in its intent to complete Table-1-2 and Figure's 1-4. Abstract Primary formulas define differences measured as a M3A2 MR = MC Rule. Tables and Figures are in the back under Tables and Figures. Equations are TFC, TVC, in TC = TFC + TVC and AFC = TFC / Quantity AVC = TFC / Q and AVC = TVC / Q and ATC = TC / Q MC = Change in TC / Change in Q Key words: marginal cost, monopoly, price maker, profit maximizing, competitive market, profits' Assignment M3A2 The MC=MR Rule The principles of MC (Marginal Cost) = MR (Marginal Revenue) rule is n effect starting at the unit of extra additional costs for that unit. Every unit after that is from MC = change in TC /divided by change in quantity when it equals MR (Marginal Revenues) structured within concepts that contemporize markets hold explicitly and implicitly act on as assumptions. Market structure Market structure benefits in limited liability corporation which has restricting relationships to cost plus and is structured as MC (Marginal Cost). Because benefits suggest production quantities it functions by measuring MC = MB. It acts as key indicator defining production balance and equilibrium. Decisions regarding expanding, or reducing production on factors and conditions dependent on price and quantities that firm average cost base on marginal averages. The following list several architectural marketing structures models formalizing public and private combinations of: Monopoly Oligopoly Pure Competition Pure monopoly All of these structures are dependent on price output on averages and marginal production directly proportional to units of labor cost divisions. In a capacity case example involving 'Long run' monopolies profits earnings 'normal profits'. In contrast short run production can capitalizes on price and quantities or imbalances in markets to set prices. A break-even point is a determining market forces, as predetermined properties. Why MC=MR Rules apply MB and MC curves are equal averages of normal profits are indications measurements comparing cost factors of social worth. The chart in Figure 1 expresses descriptive shifts dependent on price variations controlled in a normal perfect market. The chart in Figure 2 expresses descriptive shifts in a market with few barriers. It was noted, by Jane O'Sullivan's (2012) article that assessments using mathematical formulas specifically pin point capacities defining results categorically over time span and unit cost are factors seen in the MC = MR in short run profit maximization of assets. Industries form structures modeled on oligopoly, monopoly and pure competition vary regarding market environments determining the elastic curves characteristics. The indicator describes properties of price compared to output. Maximizing Profits or losses output measures the condition in relation to specializing firms' purpose in a normal pure competitive market and the accounting profits as a key in decisions effectively working in a pure competitive model taking prices established by political and industry ideas. Maximizing profits or losses output measures the condition in relation to firms' purpose o in a normal pure competitive market. Government intervention Controlling competitive system structures inn all case these regulation component tax. Creating a modified monopoly by imposing 'ceiling/floors' the agriculture markets is a primary example of imposing MSB (Marginal Social Benefits) forces. In certain market conditions as such are price driven, i.e. (WWII had command control derived from U.S. Congress to Presidential powers defending Pearl Harbor attack on U.S.) from political monopolies fixing prices, include explicit and implicit cost subsidies. In support of these concepts' Gulzari Babber's article states that business developments rely on costing systems for information about spending efficiencies and when costs fall below the MB is an indictor that profits are not sustainable. Firm in pure competition A 'Firm'' in pure competition is a “price taker” and are not in control of unit prices rather they are considered, 'taker' of the market price in a large broad based market. The business major objective of profit is to reach the 'break-even point seen in Figure 3 supply units (pg 155). The market price is what the 'price taker' conditions calls for, and the producer must adjust to price. A competitive firm must accept the price and manufacture accordingly if they choose to sell in the market at the dictated price (Mcconnell, 2013). The chart is in Figure 1. Marginal Revenue, shown in pg. 12. Profit maximizing (or loss minimizing) output Table-2 P/L (see Figure 2, pg 10). As seen in Figure 2., the breakeven point was on the second unit and the fixed cost per unit provide super profits at that rate of production output, as the loss are minimal. Economic profits, Joseph’s Farms, Inc. This is a case profile of 'super normal profits' are shown on the graphing in Figure 2. Indicating there are more buyers and fewer sellers in general for LR/SR (Long Run/Short Run) production cost operating in a normal open competitive market. Graphed data in column 10 of Table-1 (See Figure 1.) (Marginal revenue) Figure 1. Marginal Revenue (pg. 11) Price, total revenue Profit or loss data for output level ranging, 0 to 10 in Table-2, pg. 10, uses data from Table-1. (See Table 1, pg.8 and 9) Calculated break-even output Levels (break-even point) for Joseph’s Farms, Inc. used data in Table-2, pg. 10. Showed calculations at about one and one half units: $165 X 2 units = 238, and minus TC = MR ($165) or at one and half units. A firm can 'Break even' at a point in which MC = MR and cost are adjusted in marginal figures in as Point (dots) in Figure 3 shown in Appendices Figure 3 page 13. References Babber, Gulzari (2013). Integrated reporting and sustainability go hand in hand. Financial Management. Dec2012/Jan2013, p3- 3. 1p. 1 Color Photograph. O'Sullivan, Jane N. aaaaaaa92012). The Burden of Durable Asset Acquisition in Growing Populations. Economic Affairs. Feb2012, Vol. 32 Issue 1, p31-37. 7p. 1 Chart, 3 Graphs. http://libproxy.edmc.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&d b=bth&AN=71241755&site=ehost- live. Mcconnell, Campbell (20120. Microeconomics, Brief Edition. McGraw-Hill Learning Solutions, 2009. VitalBook file. Argosy University. http://digitalbookshelf.argosy.edu/books/007-7376986/id/ch0 Tables Table 1. MC = MB Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Output Level Price per unit Total Fixed Cost Total Variable Cost Total Cost Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost Marginal Revenue Total Revenue 0 $ - NA 1 $165.00 $125.00 $ 113.00 $238.00 $125.00 $113.00 $238.00 $238.00 $165.00 $165.00 2 $165.00 $125.00 $ 213.00 $378.00 $62.50 $106.50 $189.00 $140.00 $165.00 $330.00 3 $165.00 $125.00 $ 300.00 $341.00 $41.66 $100.00 $116.00 $37.00 $165.00 $495.00 4 $165.00 $125.00 $ 375.00 $406.00 $31.25 $93.75 $93.75 $65.00 $165.00 $660.00 5 $165.00 $125.00 $ 463.00 $488.00 $25.00 $92.60 $92.60 $82.00 $165.00 $825.00 6 $165.00 $125.00 $ 563.00 $283.83 $20.83 $93.88 $93.83 $205.00 $165.00 $990.00 7 $165.00 $125.00 $ 675.00 $683.00 $17.85 $96.42 $97.57 $400.00 $165.00 $1,155.00 8 $165.00 $125.00 $ 813.00 $828.62 $15.62 $103.57 $101.62 $145.62 $165.00 $1,320.00 9 $165.00 $125.00 $ 975.00 $988.88 $13.88 $108.33 $108.33 $160.27 $165.00 $1,485.00 10 $165.00 $125.00 $ 1,163.00 $1,175.50 $12.50 $117.55 $116.35 $186.82 $165.00 $1,650.00 Table 2. P/L Table-2: Joseph Farms, Inc., Revenue/Profit/Loss Data Output Level Price Total Revenue Total Costs from Table 1 Loss or Profit 0 1 $165.00 $165.00 $238.00 $(165.00) 2 $165.00 $330.00 $189.00 $330.00 3 $165.00 $495.00 $116.00 $495.00 4 $165.00 $660.00 $93.75 $660.00 5 $165.00 $825.00 $92.60 $825.00 6 $165.00 $990.00 $93.83 $990.00 7 $165.00 $1,155.00 $97.57 $1,155.00 8 $165.00 $1,320.00 $101.62 $1,320.00 9 $165.00 $1,485.00 $108.33 $1,485.00 10 $165.00 $1,650.00 $116.35 $1,650.00 Figures Figure 1. Marginal Cost Figure 2. Breakeven Figure 3 AFC Figure 1. Average Fixed Cost curve AFC = Total Fixed Cost / Quantity. Figure 4. Total Cost = Total Revenues