Microeconomics
The most common way of deciding between these two options is through capital budgeting. If the two decisions are mutually exclusive, a net present value analysis will determine which of these options is better for the store in the long run. This type of analysis involves calculating the incremental cash flows that derive from the decision, and then discounting them back to the present day. The up front cash flows should also be included in the calculation. Between two mutually exclusive options, the one with the higher NPV -- as long as it is positive -- is the option that should be selected.
However, in the course of conducting such a calculation, it will become apparent that these two tactics solve different problems. The confusion probably lies in the fact that the root issue is the same. If increasing capacity is the solution (and both of these options increase capacity), then the store needs to determine which of the issues (the workers or the equipment) is the source of the backlog. This speaks to fundamental principles of production -- one can increase capacity by reducing workflow backlogs, but increasing capacity in other areas that are not subject to backlog is unlikely to achieve any real measure of success, because the backlog will still be a constraint on capacity.
Thus, if the machine is the problem, hiring too much labor without the capital upgrade will not result in a significant increase in capacity. The store will not be able to turn out fries and burgers any faster with double the staff working on the same equipment, and this must be taken into consideration when calculating the incremental cash flows. The additional capital will increase the capacity of the store's equipment, and once that occurs it be found that the current staff size is insufficient to use this equipment to its maximum capacity. At this point, the company can hire new staff, knowing that this will result...
Microeconomics The class Principles Microeconomics. text book Principles Microeconomics N. Gregory Mankiw. paper answer questions. Final Project Following a description final project ECO-112. The project parts, answered complete project. Principles of microeconomics: Products used in daily life Product 1: A Starbucks latte Product description and usage The Starbucks latte is a coffee beverage made with espresso and steamed milk. On the company website it is described as "the original coffeehouse classic. And like most classics,
A most relevant example of a monopolistic competitive industry is given by the fast food industry. There is a great supply and demand for fast food products; numerous companies make the products, from international conglomerates such as McDonalds, to small local stores. And everybody consumes one time or another fast food products, from children to adults and senior citizens. Furthermore, the industry provides a wide array of products, including
Microeconomics Economic costs are both the direct costs and the opportunity costs of a decision. There are a number of types of costs that are discussed in economics disciplines. These can be direct and indirect costs, but more common costs are things like marginal costs. These are the added cost associated with an increase in output. Microeconomics often focuses on things like marginal cost, and uses the economic cost concept to
Labor Market, Unemployment Defining and classifying Unemployment There is a level of unemployment in any economy, which is not automatically a bad thing, as most people would think. The presence of a level of unemployment, which usually is presented as a percentage, indicates that at any one given point in that economy, there are people looking for work and managers looking for better employees. In economics, the only important factor to look
Politics, Trade and Unregulated Markets According to Frankline (April 15th, 2008), when a nation increases its public consumption, it reduces the amount of money that companies need to invest in production; therefore, in a way, that nation buys it way out of unemployment. Frankline claims that this is based on a formula devised by John Maynard Keynes nearly a century ago. The formula says that if you increase public consumption, you
Microeconomics is the branch of economics concerned with the behavior of individual entities such as markets, firms, and households. Analyzing HSBC Bank through the lens of microeconomic theory involves examining how the bank makes decisions about resource allocation, pricing, and strategy in response to market conditions and regulatory frameworks (Mankiw, 2014). HSBC, being one of the largest banking and financial services organizations in the world, offers a rich case study
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