Question

1. The entire managerial economics revolve around what to produce, how toproduce, and for whom to produce. Mention the company where you are working (if you are not currently working consider your potential employer)and give appropriate examples and explanations to support the aforementioned statement.

Answer 1

Economics basically deals with three basic questions : What to Produce, How to Produce and For whom to produce.

What to Produce : The question can be answered based on demand patterns and customer needs and preferences in the market.

How to produce : Deals with the most cost effective method of production.

For whom to produce : The customer segment which gives the maximum profits to the company

I am working with Toyota Automotive Ltd, which is into automobile manufacturing.

Toyota produces Sedan and SUV cars in order to reach the target customers. As the automobile manufacturing is the booming market with growing demand in the market, so the company has decided to produce the cars.

Toyota makes use of Robotics technology to manufacture cars. Thus it relies less on labor force. Due to use of Robotics technology, the company is able to assemble and make the car ready in 4 minutes with less amount of errors. Thus it is a preferred technology.

Toyota has targeted premium class customers as its objective is profit maximization. Thus it is able to generate high amount of profits with each car sold to the customer.