About This Chapter
Business Decision Analysis - Chapter Summary
Those who need to learn about business decision analysis, as well as those who need to brush up on this topic, can get all the information they need in this chapter. Go to the chapter guide to view all of the lesson topics available. You can review each lesson in order, or you can pick and choose particular lessons that you want to go over. Upon finishing the chapter, you will be prepared to:
- Examine making decisions with the decision analysis approach
- Explain how the break-even analysis works
- Point out the alternative operating levels and profit performance
- Offer examples of sunk costs
- Review calculations for opportunity cost
- Show the different kinds of marginal analysis considerations
- Determine pricing strategies and pricing via economic factors
- Establish the formula for target costing
- Outline how to calculate the elasticity of demand
- Evaluate the design and development of product life cycles
- Inspect the theory of maximizing profits and market structures
Several of the lessons in this and other chapters are delivered using easy-to-follow videos. The video lessons can be viewed in usually eight minutes or less. During the videos, instructors talk to you about major vocabulary words, definitions, and the applications of certain concepts. Our instructors also show you helpful visual aids, and they make sure to include several relevant examples to show you how these accounting topics work in the real world. When you watch the videos, you can always pause, rewind, or fast-forward as needed.
1. The Decision Analysis Approach to Decision Making in Business
How do you know what the best decision for your business is? What are the costs and benefits associated with each option? In this lesson, we'll examine decision analysis, including what it is and how to use value and uncertainty in your analysis.
2. Break-Even Analysis: Definition & Example
Performing a break-even analysis can help you make decisions regarding how much of your product or service you need to sell to make a profit. In this lesson, you'll learn what a break-even analysis is and how it is calculated.
3. Marginal Analysis in Economics: Definition, Formula & Examples
In this lesson, we'll discuss marginal analysis, a very important economic concept. It explains how individuals and businesses make decisions regarding commodities. We'll go over the formula and look at examples before concluding the lesson with a quiz.
4. Sunk Costs: Definition & Examples
In this lesson, sunk costs are defined and evaluated in the context of company decision making. Concepts are illustrated with examples from the construction industry and a small messenger business.
5. Opportunity Cost: Definition, Calculations & Examples
This lesson discusses opportunity costs, a central idea of economics. In addition to examining the general idea of opportunity costs, it also looks at the role of explicit and implicit costs to firms.
6. Economic Factors of Pricing and Pricing Strategy
Economic factors can alter companies' pricing strategies. Prices need to be flexible, especially in response to inflation and recessions. There are numerous strategies that can be employed to combat economic changes and lead to corporate sales and profits.
7. Target Costing: Definition, Formula & Example
Target costing is the practice by which companies set a cost for a product and stick to it. In this lesson, we'll see how it is more common for companies to do this than you might think.
8. The Elasticity of Demand: Definition, Formula & Examples
Do people buy more when prices drop? How much more do they buy? These questions can be answered by evaluating a good's elasticity of demand, which is defined and illustrated in this lesson with a few examples.
9. Product Life Cycles: Development, Design and Beyond
Have you ever considered that products, like humans, have a life cycle? You will learn about product life cycles and how they are designed and developed. See how a product goes from its introduction to being retired.
10. Maximizing Profits in Market Structures: Theory & Overview
Most businesses open with the intention of achieving high profits. The process of getting there is the difficult part. This lesson is a review of profit maximization in various competition structures. You can follow-up with a quiz.
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