Production Cost- Managerial Economics

Production Cost- Managerial Economics

Part 1: Article Review

1. As a group, find at least four (4) academically reviewed articles on production cost. Write an annotated bibliography on the four (4) articles. 2. Based on the articles you reviewed, discuss the lessons you learned. Discuss how you would use the information in managerial decision-making.

Part 2: Application

Based on the materials presented in chapters 5 and 6 of the recommended textbook, develop a product idea.

1. Describe the product in detail.

2. Assume you have sufficient production capacity to manufacture the product. What are the costs associated with the manufacturing of this product? 3. Provide detailed cost data. You cost data should be segmented into fixed and variable costs.

4. Assume that the market demand for this product is 500 units and your company’s market share is 5 percent. Based on your cost data, calculate: A. Total cost B. Fixed cost per unit (average fixed cost) C. Variable cost per unit (average variable cost) D. Total cost per unit (average total cost) E. Marginal cost

5. Based on your calculations from #3 and #4, above, produce A. Graph that shows fixed cost, variable cost and total cost B. Graph that shows average fixed cost, average variable cost, and average fixed cost. C. Based on the two graphs, discuss your observations on the behavior of the costs.




Solution Preview

  1. Haruki, Osamu, Mass production cost of PEM fuel cell by the learning curve, (International Journal of Hydrogen Energy 2004)

To analyse the mass production cost structure of the proton exchange membrane fuel cells for automobiles, a learning curve model has been developed to obtain an in-depth knowledge. The cost of the fuel cell stack is accumulated by the expenses of platinum, bipolar plates, the assembly process, peripherals, membranes, and electrodes. And therefore, the mass production effects on these particular components are projected. 

(1,218 words)

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