Economies and Diseconomies of Scales
Economies of Scale Economies of scale refer to the cost advantage brought about by an increase in the output of a product. Economies of scale arise due to the inverse relationship between the per-unit fixed cost and the quantity produced…
Break-even and Shut-down Points of Production
[vsw id=”g7wPVGgRfVc” source=”youtube” width=”611″ height=”344″ autoplay=”no”] Break-even Point of Production The break-even point can be defined as the production and sales levels of a given product at which the revenue generated from the sales is perfectly equal to the production…
Income Elasticity, Price Elasticity, and Cross Elasticity
[vsw id=”g7wPVGgRfVc” source=”youtube” width=”611″ height=”344″ autoplay=”no”] Elasticity measures the sensitivity or responsiveness of one variable to another. There are three main forms of elasticity – price elasticity, income elasticity, and cross-price elasticity. Price Elasticity Price elasticity of demand is a…
Operating, Business, Sales, and Financial Risks
[vsw id=”UO4w5yNuWdw” source=”youtube” width=”611″ height=”344″ autoplay=”no”] Risk can be defined in several ways. However, one fairly simple definition is that “risk refers to the uncertainty of a return and the potential for financial loss.” Risk can arise from financing and…
Flotation Costs Explained
[vsw id=”HkoJ_nedolg” source=”youtube” width=”611″ height=”344″ autoplay=”no”] Flotation costs are expenses that a company incurs during the process of raising additional capital. The value of these flotation costs is related to the amount and type of capital being raised. When a…
