1. choose a real or made up example of a company, and describe at least three variable costs the company has. 2. choose a real or made up example of a company, and describe at least three fixed costs the company has. 3. is gross profit or net profit more important to consider when you're deciding how successful and profitable a company is? why? 4. if you were running a company, describe at least two things you would do to improve its productivity. 5. describe at least two advantages a large company has over a smaller company. 6. choose a good you are familiar with, and analyze its economic utility, using the questions below. note: choose a good for this exercise, not a service. a. what type of good did you choose? b. describe the form utility of the product you chose. what makes its form useful? can you think of any improvements that could be made to its form utility? c. describe the place utility of the product. can

1. Choose a real or made-up example of a company, and describe at least three variable costs the company has.

MAVERICK DONUTS

Maverick Donuts produces donuts and pastries on a daily basis by using raw materials like sugar, flour, milk, and eggs. Along with many other materials, they need to produce donuts and pastries. The more the company produces, the more they have to pay for their cost of production.

Other variable costs would be as a sales commission. As they produce more, they require to grow their market to increase their sales, and for such purpose, they have to promote or advertise their product. Thus it requires extra cost, and it adds up to the cost of production.

Labor costs. The more they produce, the more they require labor and their wages to be paid. Every labor is paid by cost per unit of output.

2. Choose a real or made-up example of a company, and describe at least three fixed costs the company has.

MAVERICK DONUTS

Fixed costs are those costs that are not depended on the company’s output or sales, and they must be paid no matter the financial status of the company. For instance

COST OF PRODUCTION OF FACILITY

INSURANCE AND SECURITY

COST OF MACHINERY AND EQUIPMENT

3. Is gross profit or net profit more important to consider when you're deciding how successful and profitable a company is? Why?

When a company commences, the management is expected to have a net loss but then do better over time. So even if the net profit of the company is zero,” the company is still successful. Explained further, “Gross Profit” is the money left over after subtracting the cost of goods and revenue, and net profit is the “the bottom in” after paying all business expenses, so “Net Profit” is more important to consider.

4. If you were running a company, describe at least two things you would do to improve its productivity.

If I were running a company, I would improve my relations with my employees and workers directly. In order to work effectively towards a common goal, the relation between the owner and employees must be strong.

And the second one is the tools. I would equip my team with the right tools to make performance better, efficient, and adequate.

5. Describe at least two advantages a large company has over a smaller company.

The advantages are the following:

ECONOMIES OF SCALE: Large companies have economies of scale in many areas of the business, including obtaining capital, production, and leverage of their R&D department. These economies of scale often allow for large companies to do things like investing in training or medical facilities, have good legal counsel, or pay above-market wages, which smaller companies wouldn’t be able to.

MORE OPPORTUNITIES FOR ADVANCEMENT: Employees are often attracted to large companies because of opportunities to “climb the corporate ladder” because their jobs can grow in responsibility for their careers.

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answer; capital structure decision;