Economics

Learning Team Reflection on Objectives

Learning Team Reflection on Objectives

Among the numerous measures of how well business organization competitively performs against one another, the one measurement that perhaps portrays enormous importance and created major dialog among the team discussion is profitability. The team concluded that measuring profitability relies on the expression of performance by minimizing the loss and adjusting outputs (McConnell, Brue, Flynn, 2009). This report will finalize the team discussion in the identification of production levels to maximize profits, and explain the balancing of fixed and variable cost. Economic profit determines to be a huge factor in deciding the future success or failure of a firm that may ultimately led to critical decisions involving cost. This report will also note the discussion in applying economic cost concepts in making those business decisions.

Production Levels to Maximize Profits

To be successful and survive in a competitive field of business, a firm must deal with numerous constraints that involve maximizing profits. To accomplish this, firms must have the ability to identify production levels and resources that determines the demand for its products. Firms must also identify the supply of input and output levels and the production function that provides an overview of profits and losses. Through the changes in variable resources of material and labor that a firm uses, adjusting output can maximize profits (McConnell, Brue, Flynn, 2009). Organizations equipped with the knowledge and understanding of business revenues and costs may provide solutions in maximizing their profits using the marginal revenue equal marginal cost rule. In their explanation of maximizing profits, McConnell, Brue, and Flynn stated that, “In the initial stages of production in which output is relatively low, marginal revenue will usually (but not always) exceed marginal cost. So it is profitable to produce through this...