what is the relationship between flexible resources and cost behavior?
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Committed costs appear fixed since their supply is independent of the amount actually used. Flexible resources are supplied as needed, so their costs appear to be variable with demand.
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The price elasticity of the demand curve facing a monopoly firm determines if the marginal revenue received by the monopoly is positive (elastic demand) or negative (inelastic demand). ... If the demand is elastic, then marginal revenue is positive. If the demand is inelastic, then marginal revenue is negative.
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A consumption-based pricing model is a service provision and payment scheme in which the customer pays according to the resources used.
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Marginal costs are a function of the total cost of production, which includes fixed and variable costs. Fixed costs of production are constant, occur regularly, and do not change in the short-term with changes in production. ... By contrast, a variable cost is one that changes based on production output and costs.
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How does elasticity affect a company's pricing policy? If demand is elastic at the current price, the company knows that an increase in price would reduce total revenues. ... Demand for a good can be inelastic at a low price, but elastic at a high price.
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There are numerous factors that directly impact the elasticity of supply for a good including stock, time period, availability of substitutes, and spare capacity. The state of these factors for a particular good will determine if the price elasticity of supply is elastic or inelastic in regards to a change in price.
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A good with more close substitutes will likely have a higher elasticity. The higher the percentage of a consumer's income used to pay for the product, the higher the elasticity tends to be. For non-durable goods, the longer a price change holds, the higher the elasticity is likely to be.
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When economists refer to the “opportunity cost” of a resource, they mean the value of the next-highest-valued alternative use of that resource. If, for example, you spend time and money going to a movie, you cannot spend that time at home reading a book, and you can't spend the money on something else.
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the cost of producing an additional unit of output is more than the average total cost. ... The relationship between average and marginal variables can be stated as follows: if the marginal is greater than the average, a. the total is decreasing.
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Opportunity cost is a key concept in economics, and has been described as expressing "the basic relationship between scarcity and choice". The notion of opportunity cost plays a crucial part in attempts to ensure that scarce resources are used efficiently.
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The relationship between demand and price: the law of demand is a general relationship between price and consumption: when the price of a good rises, the quality demanded will fall. The quality of the good demanded per period of time will fall as price rises and will rise as price falls, other things being equal.
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Marginal costing is based on classifying costs by behaviour, in other words, whether a cost is variable or fixed. Absorption costing focuses on whether a cost is direct or indirect by nature.
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According to the law of demand, there is an inverse relationship between price and quantity demanded. That is, the demand cure for the goods and services slopes downward.
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The price elasticity of a good will tend to be greater: the longer the relevant time period. In examining the concept of price elasticity of demand, it is seen that if: price and total revenue change in the opposite direction, then demand is price elastic.
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Cheers. PPC or the production possibility curve slopes downwards due to the negative relationship between the resources. To produce more of one good the production of the other good must be reduced and this happens due to scarcity of the resources. Production of Both the commodities cannot be increased.
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In economic terms, there is an opportunity cost to deploying the way. That cost is reflected in the sense of effort. So, changing behavior can feel hard, because it means directing your limited mental focus on one goal and ignoring others.
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Answer Expert Verified. Three reasons a price-based system works more efficiently than central planning are flexibility, a larger selection of goods, and resources are used entirely.