We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Profit Maximisation Essay Sample

essay
The whole doc is available only for registered users OPEN DOC
  • Pages:
  • Word count: 595
  • Category: profit

Get Full Essay

Get access to this section to get all help you need with your essay and educational issues.

Get Access

Profit Maximisation Essay Sample

Is profit maximisation inconsistent with smooth adjustments to increasing scarcity?

The smooth adjustment to increasing scarcity implies the gradual technological advancements. The modern economic theory suggests that such advancements are necessary in order to maintain a feasible production.

Figure 1. The price of product as a signal of recourse scarcity.

(p. 35 Principles of Environmental Economics: Economics, Ecology and Public Policy, Ahmed M. Hussen; Routledge, 2000)

S0 – current level of supply

MPC – marginal private cost

MSC – marginal social cost

D – demand

MPB – marginal private benefit

MSB – marginal social benefit

S1 – increased supply

It is extremely difficult to predict the future demand, especially the sustainable demand.

Figure 4. The sustainable consumptions curves.

(p.24 Towards sustainable consumption: an economic conceptual framework. OECD 06.17.02)

The research showed that the current consumption pattern that takes a U shapes due to the discounted capital is not sustainable. Only in case, where technological progress will compensate for technological progress and the depreciation of the broadly defined capital the consumption could reach a sustainable pattern. Sloping downward.

These technological changes are also important if we consider the supply side.

Figure 2. Capital/resource substitution.

(p. 55 Principles of Environmental Economics: Economics, Ecology and Public Policy, Ahmed M. Hussen; Routledge, 2000)

In this case the production can be represented as a following function: Q=f(N, K, T), where Q -output; N I- an input of natural resources; K- capital, T – the current techniques of production (p. 55 Principles of Environmental Economics: Economics, Ecology and Public Policy, Ahmed M. Hussen; Routledge, 2000)

  • Figure A. This is situation is more close to the renewable resources. Still to be able to stay competitive the companies have to increase demand by bringing cheaper products to the market. For that they have to be able to cut costs.
  • Figure B. The slope of the curve increase. It means that it will cost more to make a transition form point C to point B and from point B to point A. It means that companies have to be extra careful to invest in advance in more efficient techlologies or resource substitutes.
  • Figure C represents the extreme case where capital does not matter and any decrees in the required resource N will force to decrease production.

Figure 3. Technological advances.

(p. 58 Principles of Environmental Economics: Economics, Ecology and Public Policy, Ahmed M. Hussen; Routledge, 2000)

There are two ways in which the company can deal with the resource scarcity.

  • It can either introduce the new resource that is not scare or can be renewed. It means that the one unit of resource may be compensated by fewer units of capital.
  • It can introduce the more efficient technology; in this case fewer units of resources will be needed for the same level of output.
  1. Principles of Environmental Economics: Economics, Ecology and Public Policy, Ahmed M. Hussen; Routledge, 2000
  2. Towards sustainable consumption: an economic conceptual framework. OECD 06.17.02
  3. You Can’t Eat GNP: Economics as If Ecology Mattered, Eric A. Davidson; Perseus Books 2000
  4. Citizen Participation in Resource Allocation. Mark D. Robbins, William Simonsen; Westview Press, 2000
  5. Environmental Conflict. Paul F. Diehl, Nils Petter Gleditsch; Westview Press, 2000
  6. Free Market Environmentalism. Terry Lee Anderson, Donald Leal; Palgrave, 2001
  7. How Many People Can the Earth Support? Joel E. Cohen; Norton, 1995
  8. Ecological anthropology Hardesty, Donald L. 1977. New York: John Wiley.

We can write a custom essay

According to Your Specific Requirements

Order an essay

You May Also Find These Documents Helpful

Oligopoly and monopoly markets

A monopoly market is that single firm produces unique goods and very restricted barrier to entry. Oligopoly and monopoly markets are opposite from perfect competitive market. There is the customers have simple choice in this market. It means that one firm provides the total supply of a product in a given market. For example: power electricity and water industries, nationally big industries, there is the...

Apple profit making business

Task 1- The EDU has given you a list of suitable businesses and you will need to carry out initial research on these businesses before selecting two contrasting businesses for your report. The two contrasting businesses I will be choosing to compare are Apple and Oxfam. Apple is part of the secondary sector and also part of the tertiary sector because it is a retail...

Shuman Automobile

1) Issues: Should we move to a structure that involves 3 profit centres? Should the service department be able to charge for internal work? It appears as if the accountant needs some training. 2) Background: The owner is preparing to retire from actively running the business. As a result, he wants to gradually move away from day to day involvement. In order to do so,...

Profit Margin Increase Artemis Sportsware

When writing a proposal two things need to be addressed, the problem and the proposed solution to that problem. Our task is developing a solution, to a need for a profit margin increase at Artemis Sportswear Company. Artemis Sportswear Co., is an international, multimillion dollar company, has been mentioned countless times in top financial and business magazines such as Forbes, Fortune, and Business Inc., to...

The Body Shop Canada

“You’re not the kind of franchise applicant we usually get,” said Harry Robertson, company lawyer for the Body Shop Canada, as he opened his meeting with potential franchisee Richard Paul. “I suppose we’ll find out whether that’s an advantage or disadvantage,” replied Mr. Paul. Mr. Robertson’s comment had taken Mr. Paul by surprise, and though he was pleased with his response, the comment had produced...

Get Access To The Full Essay
icon
300+
Materials Daily
icon
100,000+ Subjects
2000+ Topics
icon
Free Plagiarism
Checker
icon
All Materials
are Cataloged Well

Sorry, but copying text is forbidden on this website. If you need this or any other sample, we can send it to you via email.

By clicking "SEND", you agree to our terms of service and privacy policy. We'll occasionally send you account related and promo emails.
Sorry, but only registered users have full access

How about getting this access
immediately?

Become a member

Your Answer Is Very Helpful For Us
Thank You A Lot!

logo

Emma Taylor

online

Hi there!
Would you like to get such a paper?
How about getting a customized one?

Couldn't Find What You Looking For?

Get access to our huge knowledge base which is continuously updated

Next Update Will Be About:
14 : 59 : 59
Become a Member