Question

consider a change that you believe would be profitable for a company in the long run (with short-run analysis too).

* Clear statement of the problem


 * Academic support of problem/solution

* Industry support of problem/solution (minimum of one)


 * Clear statement of the proposed change(s) and the expected outcome(s).


Answer 1

Introduction:-

Over the years, companies have been able to position themselves in a manner that they want to be earning higher profits because of the nature and dynamics of business. It is an understood fact that companies are created to maximize the wealth of the shareholders in both the long run and the short run respectively. For this, an effective understanding of micro economics is important and it helps in analyzing the areas of shortfall with proven scientific explanation which is vital for the survival and sustenance of business enterprises respectively.

Case Specifics:-

Clear statement of the problem:-

The problem that most companies in today's environment face is that they try to alter the variable resources or fixed ones without a significant change in the other. The resultant is that there remains a miss-match of the factors of production and the company can earn significantly lesser amount of money over a period of time.

Most companies fail not because they do not have good products but rather because of the fact that they fail to manage their resources in a proper manner.

Solution of the Problem:-

The problem of in equilibrium arises as a result of resources not being utilized properly by the management. Resources are of two types mainly fixed and variable. Fixed resources include land, buildings, machinery etc., while labor resources can be considered as one of the biggest variable expenses for a firm.

The biggest problem which companies face is that their returns are not consistent and they do not operate at optimum levels. A firm’s revenue can get maximized when it applies all resources in such a manner that the productivity of each independent factor of production can be maximized.

Thus an optimum solution to maximize the profits of a firm are to have a basket of all factors of production such that the overall costs can be minimized and profits can accrue.

Industry support of problem/solution (minimum of one)

This problem has largely been supported by industry experts across the globe. Countries such as India and China which lacked capital intensive fixed assets had ample of labor but no expenditure and hence the microeconomics of the countries was never in balance. A realization of the above stated facts led to them increasing the lacking factor of production which led to balanced profits and growth.

Further, in capital intensive industries such as those in the United States once the missing input of labor was added, most industries became profitable.

Thus the industry support highlights how accruing the missing factors of production results in positive results for a firm or an industry as a whole overall.

Clear statement of the proposed change(s) and the expected outcome(s).


A change which should begin is that companies must realize the correct amount of factors of production to be deployed. This would allow them to maximize their income levels.

Operating at an equilibrium level would lead to reduced overall costs and the profits of the enterprise would become stable respectively.

Please feel free to ask your doubts in the comments section if any.