Differences of Production in the Short Run and Long Run at a Company.

As we know that every Firm’s Goal is to maximize profit or even bought their aim to the maximize profits. It can be decided by 2 times of frames: Short Run & Long Run. This is important to maintain and generate their company.

In a short run, company must remain the production fixed and can’t be changes. Their aim is to decide how many output to produce.100? 1000? Besides that, short-run decisions are also easily to reverse. There is Short-Run Production Relationship that showing different kind of output earns

·         Total product- Total output of a worker produced

·         Marginal Product- Additional of total output after adding a worker

·         Average Product- Average amount produced by each worker

In other way, a long run decisions give company a long time enough to change all production. Next, it decides what size and type to build. How big and what type? Decisions are not easily to be reversed. Moreover there are also the law of Returns to Scale. The meaning is the percentages changes lead to the percentages changes to output by knowing the firms output receives.

·         Increasing return to scale- A changes in input, give a big changes in output

·         Constant return to scale- A changes in input, give a small changes in output

·         Decreasing return to scale- A changes in input, give a constant changes in output

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Let me show you all how Elasticity responsive to Sales Promotion/Offer changes?

As we know Elasticity is to measure people responsive to the changes variables. Basically, we know that the 3 common elastic. (Elastic Demand, Inelastic Demand, Unit Elastic Demand). By using a market sales promotion will show us how people respond to it by using the 3 commons elasticity.

Firstly, we know that Luxuries Products are expensive and valuable. As a human, we know that if there is any offer in Luxuries Products we will grab it at the first place without thinking. Luxuries Products can be Shirts, Shoes, or even others. From the pictures below, we know that human react elastic to Luxuries Products by showing crowded.

Secondly, is Necessities Products which is cheap and can be get easily. Most of the necessities products can be found from any store. Example: Cold storage, Jusco, Tesco. When we saw offers on it, we mostly will not bother or care it. From the pictures below, we know how inelastic demand responds to necessities products, not even a single people.

From the novel above, we know that how elasticity happen and respond but it might not be same to everyone. So there are 7 different determinants of Elasticity by showing differently elastic demand. Luxuries vs. Necessities, Availability of Substitutes, Percentage of Income Spent, Price of the Product itself, Level of Income, Habits and Time period.

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MONOPOLY MARKET

         In economics, monopoly is a firm that is the only producer of goods that has no good replacement which is also called as a monopolist. As practiced, because of legal barriers, true monopolies are difficult to find in the U.S nowadays. There are 5 features of monopoly and those 5 features are price discrimination, close entry, price maker, close substance does not exist in monopoly and last but not least single sellers but many buyers.

As I have analyzed about monopoly, this is an example of a case study about the TNB (Tenaga National Berhad). A publicly listed company, TNB has a monopoly over the communication and distribution of electricity in the Peninsular of Malaysia. TNB is responsible and takes charge on electricity generations, communication and distribution and last but not least retail supply in the Peninsular of Malaysia. TNB was configured in the year 1990, following the corporation of The National Electricity Board in the line with the help of the Government’s privatization policy. By the year 1996, TNB had to go through actual internal restricting with the evolution of many subsidiary firms. Shortly, TNB productions Sdn. Bhd. is charged with the function of the production of a firm and the communication and distribution section get hold of by TNB Communication Sdn. Bhd. and also, TNB Distribution Sdn. Bhd. personally.

Nevertheless, regardless of Malaysia’s economic downturn, projections be a sign of that Malaysia’s demand for electricity is expected to proceed to grow. For instance, top demand for electricity is expected to grow from 8,471 MW in the year 1998 to 14,095 MW in the year 2007. It is supposedly that the country’s energy reserve margin will fall under the psychological barrier of 30% by 2001.

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Demand, Supply curve and Price elasticity

Prices of CNY delicacies have increased during this Chinese New Year is attributed to supply side factors and demand curve. During CNY, demand for CNY delicacies & goodies have increased. This causes the demand curve to shift to right. For example, shark fin soup. Consumption of shark fin soup has risen dramatically with the middle class becoming more affluent, as communities around the world enjoy increasing income levels.

Moreover, prices of delicacies such as mandarin oranges have increased were up 10% due to bad weather and floods which resulted in lower harvest. The supply curve for these delicacies will shift to left. Besides, prices of CNY delicacies have increased due to higher ingredient costs, wages and rent. Since profits of the firms are strongly influenced by the cost of inputs used in the production process, the cost of production will thus affect how much a firm is willing to supply. The higher ingredient costs, wages and rent imply that it now costs more to produce than before; profit consequently declines. Firms will now produce less at each and every price, causing the supply curve to shift left.

In the analysis above, we have explained why the price of CNY delicacies and goodies rise. However, why is it that businesses readily and willingly increase prices during this festive period when there is a possibility that higher prices will result in a fall in total revenue and hence profits, ceteris paribus? This is where the concept of Price Elasticity of Demand (PED) can be applied.

During the festive period, CNY delicacies and goodies are deemed necessities. As such, the PED for such goods are price inelastic (PED < 1), where consumers do not reduce their consumption of these goods by large amounts, even as prices rise. Hence, retailers willingly pass on the increased cost of production to the consumers in terms of higher price. This rise in price results in a less than proportionate fall in quantity demanded and total revenue will increases.

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