Consider the following statement: To maximise profit, you need to sell your outp
ID: 2698719 • Letter: C
Question
Consider the following statement: To maximise profit, you need to sell your output at the highest price. After what you have learned this week with regards to costing systems and pricing of products, analyse the validity of this statement. How should marginal costs be considered when determining prices?
Please put into consideration while answring the above question:
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Note: - this question are consist of TWO (2) parts please cover all these questions in this assignment in order to my requirements too
1-analyse the validity of this statement?
2-How should marginal costs be considered when determining prices?
Need about 500 words.
My requirements.
1- Please choose real companies to discuss.
2- Please don%u2019t use more than one website on reference.
3- Need at least 3-4 Reference
4- Please use Harvard style.
5- Referencing (in text citation) should be evident in the discussions.
6- Free of plagiarism because my university) University of Liverpool) using a very strike program in check called (TURNITIN) and its accurate.
7- Plagiarism level allowed 2% only otherwise it will not acceptable.
8- This assignment for master degree please do your best effort to get A or B grade.
Please use in assignment the following:-
1- Introduction.(defined the main terms).
2- Body. (Discussion).
3- Conclusion.(summarize the main points).
Explanation / Answer
Introduction
Determination of prices is done in many different ways based on many different considerations. Even when prices are set on the basis of cost, there are different methods used by different companies, and by the same company under different situation.
Body
The marginal costs are usually considered for pricing decisions that involve decisions on changing prices from a given level. This involves comparing the impact of any price changes on marginal cost and marginal revenue. When the value of marginal revenue minus marginal cost is positive the planned change will result in increase in the profit.
Marginal costs are also used for long term capacity and pricing decision in the form of break-even analysis.
Evaluating the marginal cost helps a business determine if it should produce more or fewer goods. Determining the marginal cost differs from calculating the average cost: While the average cost is the price divided by the number of units produced, the marginal cost is the incremental cost of producing just one more item. If the marginal cost exceeds the marginal revenue -- or, the amount of money earned from producing an additional unit -- then the businesses stops producing more of the item.
In perfect competition, firms will produce as many units as possible while still covering their costs on their most expensive unit. They will therefore produce more units until their marginal costs is equal to the price they can sell that product for. Therefore prices will fall (as more goods are supplied) and marginal costs rise (as firms use more expensive and/or less suitable resources to produce) until the two meet.
Conclusion
This analysis permits taking decisions on production capacity based on considerations of fixed costs, variable or marginal cost, manufacturing capacity, and required minimum levels of sales to break-even.
I THINK IT CAN BE HELPFUL NOW...I ADDED SOME MORE MATERIAL IN IT
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