A Brief Note On Business Management And Cost Costs

Economics Gavin Clark HND Business 1. In the simplest term, total cost is all the costs incurred in the production of a product or the engagement of an activity. Total costs are calculated through adding together the total fixed costs and the total variable costs. Variable costs are costs that change based on the amount of goods bought or the amount of services used. Fixed costs are costs that don’t change each month due to having no relationship with the amount of products produced. TC=TVC+TFC The average cost is the average total costs of production at a particular level of output. It is calculated by dividing the total costs by the level of output produced in relation to production. The average total cost will fall initially bottom†¦show more content†¦The first is the barriers to entry for new firms. Because there are few firms operating in the market, it can be very difficult to enter the market. In some highly profitable and competitive markets, it can be near impossible to get a foothold in the market. Another characteristic is the interdependence of firms. Because of the few number of firms operating, they need to take into account the actions the others. This means they are dependent on the other firms. All the firms are affected by their rival’s actions for things like price, product specification and advertising. None of the firms can stop observing the other businesses as this could leave them at a disadvantage in the way they operate. With an oligopoly, the demand curve is both elastic and inelastic. If the demand curve is above the kink, it is elastic. This is because if the firm attempts to put the price up, the other firms operating will not follow them in doing so. If the demand curve is below the kink, it is inelastic. This is because the other firms will follow them as customers will switch to the cheaper business, if they don’t demand to go down. 3. A monopoly market structure is when a single business is operating in a market unchallenged and without competition. This means that if people need a specific product or service there is only one business to buy it form. This leads to the single business