Question

In: Economics

It is said that “As products mature, both location of sales and optimal production changes”. Justify...

It is said that “As products mature, both location of sales and optimal production changes”. Justify
the statement in the light of product life cycle theory.

Solutions

Expert Solution

As per the product life cycle theory,products undergo the 3rd stage known aa Maturity stage.In this stage consumers are well known about the product and also own it.In this stage the volume of sales increase at a gradual rate.Hence location varies.At this stage, company faces many competitors and hence original price reduces in order to pillar the share market and also back up sales.there is also a fall in profit margin. then the producer will tend for further more available markets.With this phenomena the flow of trade and the direction of trade is affected.This leads to change in location of both sales and optimal production changes.As the product reach its maturity stage,after local market demand is fulfilled, producer haunt for external potential markets,which have knowledge and demand both for the product.Hence the producer will then have its production for the external markets as well.sales extends from one place to another,and according production also.

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

1.) Describe the changes in production requirements and the location of production that take place over...
1.) Describe the changes in production requirements and the location of production that take place over the three phases of the product cycle.
Draw both the ethanol fermentation products and lactate production, indicating the location of C-14 if glucose-6-phosphate...
Draw both the ethanol fermentation products and lactate production, indicating the location of C-14 if glucose-6-phosphate labelled with C-14 at Carbon 1 were used.
Problem 6-25 Prepare and Interpret Income Statements; Changes in Both Sales and Production; Lean Production [LO6-1,...
Problem 6-25 Prepare and Interpret Income Statements; Changes in Both Sales and Production; Lean Production [LO6-1, LO6-2, LO6-3] Starfax, Inc., manufactures a small part that is widely used in various electronic products such as home computers. Results for the first three years of operations were as follows (absorption costing basis): Year 1 Year 2 Year 3 Sales $ 1,000,000 $ 800,000 $ 1,000,000 Cost of goods sold 740,000 520,000 785,000 Gross margin 260,000 280,000 215,000 Selling and administrative expenses 230,000...
Problem 5-25 Prepare and Interpret Income Statements; Changes in Both Sales and Production; Lean Production [LO5-1,...
Problem 5-25 Prepare and Interpret Income Statements; Changes in Both Sales and Production; Lean Production [LO5-1, LO5-2, LO5-3] Starfax, Inc., manufactures a small part that is widely used in various electronic products such as home computers. Operating results for the first three years of activity were as follows (absorption costing basis): Year 1 Year 2 Year 3 Sales $ 1,000,000 $ 800,000 $ 1,000,000 Cost of goods sold 740,000 520,000 785,000 Gross margin 260,000 280,000 215,000 Selling and administrative expenses...
Problem 6-25 Prepare and Interpret Income Statements; Changes in Both Sales and Production; Lean Production [LO6-1,...
Problem 6-25 Prepare and Interpret Income Statements; Changes in Both Sales and Production; Lean Production [LO6-1, LO6-2, LO6-3] Starfax, Inc., manufactures a small part that is widely used in various electronic products such as home computers. Results for the first three years of operations were as follows (absorption costing basis): Year 1 Year 2 Year 3 Sales $ 1,000,000 $ 780,000 $ 1,000,000 Cost of goods sold 750,000 540,000 787,500 Gross margin 250,000 240,000 212,500 Selling and administrative expenses 230,000...
Production: a. State the decision rules used for finding the optimal amount of input(s) in both...
Production: a. State the decision rules used for finding the optimal amount of input(s) in both short-run and long-run production” ​2 points b. Using your own words, explain the rationale behind each stated rule as if you were explaining them to someone who has not yet completed: ​2 points c. The Demand for Labor is the visualization of what important short-run production concept, and what would shift this demand curve to the right? ​2 points d. Use your answer above...
A sales budget is given below for one of the products manufactured by the Quick Production...
A sales budget is given below for one of the products manufactured by the Quick Production Limited: July 25,000 units August 40,000 units September 65,000 units October 45,000 units November 35,000 units December 30,000 units The inventory of finished goods at the end of each month must equal 20% of the next month's sales. However, on June 30 the finished goods inventory totalled only 4,000 units. Each unit of product requires three pounds of specialized material. Since the production of...
PT TOBA produces two types of products both TAKO and TAKI through joint production process. Both...
PT TOBA produces two types of products both TAKO and TAKI through joint production process. Both products must be further processed and then it can be sold. In April 2016 the production cost incurred consisted of a prime cost of $ 10,000, a direct labor cost of $ 4,000 and a conversion cost of $ 14,000. The production process in April produced 500 units of TAKO and 2,000 TAKI units. The cost for further processing TAKO is $ 5 per...
PT TOBA produces two types of products both TAKO and TAKI through joint production process. Both...
PT TOBA produces two types of products both TAKO and TAKI through joint production process. Both products must be further processed and then it can be sold. In April 2016 the production cost incurred consisted of a prime cost of $ 10,000, a direct labor cost of $ 4,000 and a conversion cost of $ 14,000. The production process in April produced 500 units of TAKO and 2,000 TAKI units. The cost for further processing TAKO is $ 5 per...
Instead, let’s talk about sales mix. This relates to the mix of products. How do changes...
Instead, let’s talk about sales mix. This relates to the mix of products. How do changes in the mix of products impact breakeven? How could a shift in sales mix result in both a higher breakeven point and a lower net income? Use specific examples from a company you know something about. (for instance, for Apple you could do laptop vs. I-series items) What are the assumptions underlying sales mix and cost volume profit that are potentially misleading?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT