Question

Company -TESLA MOTORS -Examine the costs of production for your firm. a) Analyze the various costs a firm faces, their trends over time, and how they have impacted your firm’s profitability. b) Apply the concepts of variable and fixed costs to your firm for informing its output decisions. For instance, analyze how different kinds of costs (labor, research and development, raw materials) affect the firm’s level of output. V. Explore the overall market for your firm. a) Discuss the market share of the firm and its top competitors by providing details on current percentages for each firm and describing the trend over time. You might consider presenting the data graphically. b) Analyze the barriers to entry in this market to illustrate the potential for new competition and its impact on your firm’s future in the market. c) Describe the market structure for this firm and analyze how this affects the firm’s ability to influence the market. VI. Recommendation a) Develop a recommendation for how the firm can manage its future production by synthesizing the data presented. b) Suggest how the firm’s position within the market and among its competitors will allow it to take your recommended action. c) Describe how the firm can sustain its success going forward by evaluating the findings from demand trends and price elasticity

Answer 1

Ans.(a) Cost of production refers to the total incurred by a firm or a company to produce a final product to offer for sale in the market.Production cost includes land, labour and capital and many other various costs tesla motors faces to produce its final product in the market. such variable costs are as follows:

1. fixed cost

2. variable cost

3. total cost

4.Average cost

5. Marginal cost

and to calculate the total cost we use the formula

Average cost per unit= Fixed cost+ variable cost

Total number of itmes produced

(b) Analysis of various costs a firm faces and how they have impacted Tesla company's profitability

1. Labour: It is included in the variable cost and the employment of labour is one factor which increases the cost of production of any industry or firm. Now for our Tesla motors if we take into account the intervention of technology in the production of a unit good then we can bring this cost down, because new technology increases output per worker leading to lower cost of production.

2. Research and Development: Research and development is one cost that if invested wisely in, can reap huge amounts of profits. Huge manufacturing companies like Tesla motors if take into account the buying pattern and trends prevalent in the market for a particular type of product, then the company can invest into those kind of products to suit the needs of their consumers.

3. Raw Material: a rise in the cost of raw materials will increase the price of the product and vice versa. IF for example the price of Iron increases it will ultimately affect the final cost of the product.

4. Tax: Higher National Insurance of workers raises the cost of production.

Thus looking at the above explanation, it is wise for the company to be invested in reducing the cost of production by bringing down the variable cost and thus increasing output for more profits.