The Design and Efficient Production of Ford’s Suvs Involved Not Only Some Impressive Engineering, but a Lot of Economics as Well. as a Business Manager Explains the Importance of Economics in Ford’s Corporate Decision Making

1. The design and efficient production of Ford’s SUVs involved not only some impressive engineering, but a lot of economics as well. As a business manager explains the importance of economics in Ford’s corporate decision making.

As a Business Manager, I first say that Ford should think carefully about how the public would react to the design and performance of its new products. How strong would the demand take off initially and how fast it will grow? What would be the demand on the prices that Ford has changed?

The second thing is that Ford had to be concerned with the cost of manufacturing these cars. How high the production of these cars would be? Is it depending on the number of cars produced each and every year? How would be the union wages negotiations affects the costs? To maximize the profits how many cars should be produced each year should also be decided by Ford.

Last but not least, Ford should be thinking about its relationship with the Government and its effects of regulatory policies. For example, all of the Ford’s cars should meet the federal emission standards, which must comply on health and safety regulations.

2. Distinguish between accounting profit and economic profit. Explain with an example.

It has been widely said that profit is the revenue one gets post cost incurred have been deducted. But most of us are unaware that there are two different kinds of profits.

1. Accounting profits

2. Economic profits

However, there are a certain differences between Accounting and Economic profits. Economic cost is the difference between the total revenue and the total cost, including the cost of the opportunity. On the other hand Accounting profit is the difference between the total revenue and the total cost, excluding the cost of the opportunity.

One of the main differences is that the economic profit will always be lower when compared to accounting profits. When compared to economic profit, the accounting profits are only...