APPLYING FIVE ECONOMIC CONCEPTS

Applying Five Economic Concepts

Company: COKE       Sector: Beverage

1^st concept

Economics of Scale

As a company is able to produce in huge quantities it is able reduce it’s per unit cost of production thereby enjoying benefits of of producing in large quantities.

2^nd Concept

Producer Surplus

A producer is able to earn producer surplus when he/she is able to charge a price more than his minimum selling price

3^rd Concept

Production Possibility Curve

Production Possibility Curve can have termed as different combination of goods/services that can be produced by switching resources between this good/ service.

4^th Concept

Diminishing Marginal Utility

As a person consumes increased amount of a good/service marginal utility achieved from consumption of additional unit gets reduced.

5^Th Concept

Substitution Effect

It can be defined as a presence of any other good/service which can substitute the good/service, currently in use. Degree of substitutability of any good has effect on it’s pricing.