HND大二经济学.doc

The micro economic about Sony詻筱敉Summary: As a manager of a company, he should consider the economic of scale. It relation to many problems, like the range of cost in the long run, how to get the profit maximization, how to choose the market structure and the characters of the market and so on. This report will relation to these problems. Also it will talk about the alternatives to profit maximization.Key words: cost, profit, price and output, the structure of marketSony is a famous company in the world. The play station 2 represents a huge gamble that will pay off only if it sells in vast quantities. Sony is conscious that if the product sells in limited quantities, that its costs will be about $ 100 per unit, however , if they sell about 50 million worldwide, that its costs will drop to about $ 10 per unit.Long run is defined as that period of time when all the factors of production can be varied. If for example, a firm had been restricted because of space and now finds it can expand or move to a bigger production unit it could also perhaps purchase more equipment, employ more labor. All the factors of production can be varied a firm should be able to expand the scale of its operations to continue obtaining falling costs as output level increases. These activities should allow reductions in costs, coming about because of size and know as economies of scale.The purpose of a company is to get more profit. Sony hope that their new machine will be a focal point for devices such as TVs, audio systems, digital cameras and will connect customers to the internet. Profits can also be termed Normal or Supernormal. Profit is the reward to entrepreneurs and the incentive that encourages them to take risks. It has two functions, one hand is that for an entrepreneur profit is an incentive to undertake a risk in the belief that a gain can be made. On the other hand, profit is also a reward. It must be earned, as we have seen, generally in an imperfect competitive situation. Many business fail and for many different reasons.To some extent we have already touched on this premise in suggesting that profit maximization is not always the main goal of a firm. This relate to alternatives to profit maximization. I will give two theory-Satisficing Behaviour Theory and Sales Revenue Maximization Theory.Satisficing Behaviour theoryThis particular theory was expounded by H A Simon and his colleague A Cyert. It is based on the fact that achieving specific targets with regard to sale, profit and market share will result in satisficed behaviour by those who own and those who run firms. They know that it may be possible to do better but in the long run to press for further profit may result in unintended damage.Sales Revenue Maximization theoryPropounded by Professor W J Boumal based on the following:1. Managers get better perks and salaries from sales than profit.2. Market share is considered a better sign of progress of a firm.3. Because of the above, heavy adverting will take place to maximise sales.4. Profit may be reduced to pay for advertising.5. Firms will still make profits-to keep shareholders happy-and salaries and perks up-but it will not be a Profit Maximisation Philosophy.6. Firms which operate on this philosophy will attempt to sell more but at a lower price than a firm looking for maximum profit.In the case study the Sega, Sony and Nintendo are transforming the games console from a toy into a sophisticated electronic device aimed at adults with money to spend. So the type of the market is oligopoly. Oligopoly is markets dominated by a few large producers, e.g. oil and detergents. This means that there are only a few sellers of a particular commodity. These are quite a number of oligopolies in the United Kingdom. It has many characteristics, for example, high degree of industrial concentrations and goods or services may be very similar. If Sony company wants to develop well, it should do its best to make the profit maximization. The condition get profit maximization is that firms will seek to sell products up to sell products up to the point where Marginal Cost equals Marginal Revenue. From this point extra production will result in costs becoming greater than the extra revenue to be earned. The point at which Marginal Costs and Marginal Revenue are equal is the point at which profits are maximized.Price is OP and output is OQ. At prices higher than P demand is elastic-raising prices will likely cause loss of market share. At prices lower than P however the fear is that cutting prices will force rivals to follow suit and there will be little gain in the way of additional sales.A problem, which is unique to oligopolies, is that a firms demand curve may not follow the assumptions upon which they have so far been structured. A consequence of oligopoly may therefore be that a business may appear to face a kink in the demand curve for its product.Also it has other market structure, like perfect competition. It also has many characteristics, like a large number of buyers and sellers of the commodity, so that no one firm can affect the market price through its own action and freedom of entry and exit to the market for buyers and sellers.The diagram below depicts the situation, which relates to price and output, and the premise is that AR=MR=Price. MR means Marginal revenue and we have already used it. AR means Aaverage Revenue and is obtained by dividing the value of all the sales by the