Markets, Profits and Prices Case Study Example | Topics and Well Written Essays - 1500 words

Markets, Profits and Prices - Case Study Example If revenue is less than total variable costs, a firm should stop operating, even in the short run (Barron, Lynch & Blanchard, 2003, p.241). The second rule applies the concept of marginal cost. The profit must rise if producing another unit of output adds more to revenues that to costs. Similarly, the profit must fall if producing another unit increases costs by more than it increases revenues. The analysis of fixed, variable and marginal costs combined with identification of the market in which Boeing operates and the concept of opportunity costs can assist in understanding how Boeing estimated the offer made to its workers in a commercial aircrafts division. In the context of production, fixed costs are costs that do not change with the level of output they produce. Whether the firm produces 1 million units of output or zero units of output, those costs must be paid (Barron, Lynch & Blanchard, 2003, p.241). For Boeing, the plant, machinery and equipment should constitute the majority of its fixed costs in the commercial aircraft division. ... Other fixed cost components might include wages to executives, administrative and selling expenses, leases, etc. Overall, Boeing is expected to have a very high level of fixed costs. "On the other hand, any costs that do vary with output, like materials and labor, are referred to as variable costs" (Barron, Lynch & Blanchard, 2003, p.241). The major variable costs for Boeing are materials used for aircraft production (i.e. steel), utilities and labor. It is stated in the article that there are more than 18,500 members of the International Association of Machinists and Aerospace Workers covered by the Boeing contracts. This number indicates that Boeing hires a large amount of workers. Therefore, labor costs might account for the majority of variable costs of Boeing in producing commercial aircrafts. The total cost of producing a given amount of output is simply the sum of costs associated with the hiring of all the inputs, both fixed and variable. The average cost for Boeing is the total cost divided by the number of aircrafts that Boeing produces. Even though average cost figure provides some useful information to the company, it does not seem to play a significant role in economics decision-making."The marginal cost of production is the increase in total costs resulting when output is increased by one unit" (Barron, Lynch & Blanchard, 2003, p.79). Commercial aircrafts are very large products. So the marginal cost of production of Boeing should be very high in money terms, but commensurate with the prices Boeing charges for its aircrafts. Out of fixed and variable cost, only variable cost plays a role in decision-making. "Because the fixed costs do not vary with the level of output, they are irrelevant in

Introduction to Mechanical Engineering Essay Example | Topics and Well Written Essays - 2250 words

Introduction to Mechanical Engineering - Essay Example Mechanical engineering is among the oldest engineering branches. The branch has also been named as the ‘mother’ branch of engineering. One appealing characteristic of mechanical engineering is the extreme broadness and diversity of its application base. Nearly all inventions made in the ancient times and most in this modern era are attributed to one or more applications of mechanical engineering (ASME International). Mechanical engineers are usually involved in concepts like thermodynamics, kinematics, robotics, fluid mechanics, structural analysis among others. The above concepts are used in the designing process of state-of-the-art units of manufacturing, aerospace and aircraft parts, a range of industrial machinery and various motor vehicle types. Mechanical engineers have a large contribution to the development of different power-plant equipment, engines, complex and simple machinery and cooling and heating systems. Apart from designing mechanical systems, mechanical engineers are also involved in maintaining, testing and manufacturing them (Wickert 2). The abovementioned are the conventional responsibilities and roles of mechanical engineers. ... list of 36 technical divisions, ranging from aerospace engineering and sophisticated energy systems to textile engineering and solid-waste engineering. Due to the diverse nature of mechanical engineering, professionals are involved in designing and building of devices and machines which allow people to survive and work under water, on the ground, in the air and in space. They manufacture machines which can extend people’s abilities, health and living standards, and impact their living environment. Naturally, the availability of materials for tackling their tasks determine most of the things these professionals can or cannot achieve. This is the reason why engineers work closely with material scientists with the aim of tailoring the mechanical as well as electrical and chemical characteristics of materials to explore the possibility of making new applications (Wickert 7). The job profile of mechanical engineering is ever increasing and this calls for professionals to venture in to marketing and financial features of product development as well as into management of both people and resources. In general, mechanical engineering provides a wide range of job choices to students seeking a stable and interesting career. Beginning Your Journey into Mechanical Engineering The first step to take in order to become a mechanical engineer is passing in chemistry, mathematics and physics. To qualify for enrollment into a mechanical engineering programme in a college, one should score at least 50 to 60 percent in the three subjects. After this, one is expected to sit for entrance examinations like The Joint Entrance Examination for IITs (IITJEE) to be admitted to different IITs among others. There are numerous engineering colleges in the world where one can get enrolled into a