Running head: Cost Concepts, and Market Structure Proposal 1

Revenue, Cost Concepts, and Market Structure Proposal

Melissa Hillyer
University of Phoenix
Economics 561
Dr. Kocharyan
June 30, 2010
Revenue, Cost Concepts, and Market Structure Proposal 2
Abstract
The following paper will analyzes Thomas Money
Service scenario data and make recommendations to the companys
increasing revenue. This paper will analyze and determine how to fixed
variable cost that should to maximize the profits, achieve ideal productions
levels, and identify methods to reduce costs. Recommendations should
involve good decision making skills, planning, teaching, coaching,
educating, and analyzing the current products and services can determine the
future forecast for Thomas Money Service Inc. In order for Thomas Money
Service to obtain their profit maximizing output quantity, the organization
must start by recognizing that profit is equal to total revenue minus total
cost. Recommendations for Thomas Money Service in a falling economy for
organization should be decreasing prices until the economy start moving
forward in a positive direction. Other recommendations can include
collaborating on the economic problems or conditions and researching a
solution to accommodate the customers that surrounds the organization. In
todays struggling and uncertain economy organizations can market their
products through marketing such as advertising, Internet, word of mouth,
newspapers, radio, and television Finally, attached chart represents variable
cost, marginal cost, profit, price and other activities within organization of
Thomas Money Service.

Revenue, Cost Concepts, and Market Structure Proposal 3

Recommendations for Thomas Money Service Increasing Revenue
Established in 1940 Thomas Money Service Inc is a consumer finance
company known for granting small loans for household needs. In addition,
the organization expanded their services by issuing business loans,

commercial real estates loans and business acquisition financing. The first
recommendation should involve implementing a plan for the future of
Thomas Money Service. This plan should include products in the
organization product line. This plan will include advertising marketing
campaigns, along with a timeline. Each product should be assessed and
gauged for the amount of income predictability it will bring. The list should
be prioritized and those items with the highest stability should have top
priority for implementation (www.ezinearticles.com). The second
recommendation involves in analyzing the current products and services
which gives the organization a good idea with a high level of monetary
stability. In addition, contract agreements have been known to be a stable
income that the organization can rely on for future revenue. The third
recommendation includes good decision making skills, time management
skills, critical thinking skills, leadership skills, and problem solution skills.
In addition, employees with these skills can make last minute decisions base
on the past recommendations with the organization. Furthermore,
employees can think outside the box if several employees are validated in
the decision making solution. The forth recommendation includes training,
educating, and coaching employees about the products and services of
Thomas Money Service. Most importantly, hands on training are a practical
resource the organization can use to implement goals for the organization
Revenue, Cost Concepts, and Market Structure Proposal 4
Moreover, in this economic time Thomas Money Service competes with
competitors; however the organization can increase their profits by marginal
cost which equals to their marginal revenue.
Achieve Idea Production Levels
To achieve ideal production levels an individual must under the field
macroeconomics, the production possibly frontier (PPF) represents the point
at which an economy is most efficiently producing its goods and services
and, therefore, allocating its resources in the best way possible
(www.investopedia). During this time the company or organization must
decide what goods and service they should produce in order to real their goal
Determine how the Fixed & Variable Cost should be adjust to Maximize
Profits
Thomas Money Service should recognize that an increase in the fixed
variable cost may wipe out potential growth or profits for the organization;
however, this doesnt alter the point that those profits has been maximize.
Variable costs are those cost that change with the level of output. They
include payments for materials, fuel, power, transportation services, most
labor, and similar variable resources (McConnell, p.9, 2009). During this

time when the production begins variable cost can increase by decreasing
amount. Variable costs can be controlled or altered in the short run by
changing production levels. Fixed costs are beyond the business managers
current control incurred in the short run and must be paid regardless of the
outcome (McConnell, p.9, 2009).
Revenue, Cost Concepts, and Market Structure Proposal 5
Thomas Money Service can maximize their profits by choosing to supply
the level of output to their marginal revenue which equals to its marginal
cost. However, when the marginal revenue exceeds the marginal cost the
organization can earn profits by increasing its output. But at the same time,
if the marginal revenue is below Thomas Money Service can lose revenue;
therefore, the organization must reduce its output. Below is a chart which
indicates the variable cost which can change the output within the Thomas
Money Service.
OUTPUT | PRICE
| MR | TR | TC | FC | VC | MC | AFC | AVC
| PROFIT |
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
| $990.00 |
|
|
|
|
|
|
1
| $2,600.00 | $2,600.00 | $2,600.00 | $1,050.00 | $990.00 |
$60.00
| $60.00
| $990.00 | $60.00
| $1,550.00 |
|
2
| $2,500.00 | $2,400.00 | $5,000.00 | $1,100.00 | $990.00 |
$110.00
| $50.00
| $495.00 | $55.00
| $3,900.00 |
|
3
| $2,400.00 | $2,200.00 | $7,200.00 | $1,145.00 | $990.00 |
$155.00
| $45.00
| $330.00 | $51.70
| $6,055.00 |
|
4
| $2,300.00 | $2,000.00 | $9,200.00 | $1,200.00 | $990.00 |
$210.00
| $55.00
| $247.50 | $52.50
| $8,000.00 |
|
5
| $2,200.00 | $1,800.00 | $11,000.00
| $1,262.00 | $990.00
| $272.00 | $62.00
| $198.00 | $54.40
| $9,738.00 |
|
6
| $2,100.00 | $1,600.00 | $12,600.00
| $1,335.00 | $990.00
| $345.00 | $73.00
| $165.00 | $57.50
| $11,265.00
|
|
7
| $2,000.00 | $1,400.00 | $14,000.00
| $1,423.00 | $990.00
| $433.00 | $88.00
| $141.40 | $61.90
| $12,577.00
|
|
8
| $1,900.00 | $1,200.00 | $15,200.00
| $1,517.00 | $990.00
| $527.00 | $94.00
| $123.80 | $65.90
| $13,683.00
|
|

9
10
11
12
13
14
15

| $1,800.00 | $1,000.00
| $647.00 | $120.00
|
|
| $1,700.00 | $800.00
| $782.00 | $135.00
|
|
| $1,600.00 | $600.00
| $927.00 | $145.00
|
|
| $1,500.00 | $400.00
| $1,101.00 | $174.00
|
|
| $1,400.00 | $200.00
| $1,301.00 | $200.00
|
|
| $1,300.00 | $0.00
| $1,501.00 | $200.00
|
|
| $1,200.00 | ($200.00)
| $1,701.00 | $200.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| TR-TC = Profit
|
|
|
|
|
|
|
|
|
|

| $16,200.00
| $1,637.00 | $990.00
| $110.00 | $71.90
| $14,563.00
| $17,000.00
| $1,772.00 | $990.00
| $99.00
| $78.20
| $15,228.00
| $17,600.00
| $1,917.00 | $990.00
| $90.00
| $84.30
| $15,683.00
| $18,000.00
| $2,091.00 | $990.00
| $82.50
| $91.80
| $15,909.00
| $18,200.00
| $2,291.00 | $990.00
| $76.15
| $176.23 | $15,909.00
| $18,200.00
| $2,491.00 | $990.00
| $70.71
| $177.93 | $15,709.00
| $18,000.00
| $2,691.00 | $990.00
| $66.00
| $179.40 | $15,309.00
|

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Revenue, Cost Concepts, and Market Structure Proposal 6

Describe the Process to make Recommendations.
The process of making a recommendation includes coming up
with a solid plan and stick by that plan. This includes making setting rules
and regulations within the organization so the organization can be successful
in the future. Recommendations can include communicating with all
employees involved in the project or plan. This also includes educating,

training, and coaching all employees to make sure they have a clear
understanding about the project or plan.
Economic Concepts to Support Recommendation
In the uncertainty Thomas Money Service must develop a plan
which the organization can deal with in the struggling economy. Moreover,
economic concepts include unemployment, growth, inflation,
macroeconomic issues, and supply and demand and the list goes on.
Recommendations for Thomas Money Service can include good decision
making skills, communication and leadership skills will help this
organization through hard times in the economy.
Conclusion
In todays economy times Thomas Money Service has proved
that the organization can grow into a successful organization. Moreover,
unemployment and uncertainty surrounds the organization but hard work
and determination has proved the organization can help people who are in
need of their products and services.

References:
McConnell, C. R. ,Brue, S. L., & Flynn, S.M. (2009). Economics:
Principles, problems, and policies (18th ed.). New York: McGraw-Hill Irwin
www.investopedia
www.ezinearticles.com