explain two causes of an increase in a firm's profit
Answers
Answer:
Relative costs.
An increase in costs will decrease profits; this could include labour costs, raw material costs and cost of rent. ... Alternatively, if the firm is able to increase productivity by improving technology then profits should increase. If a firm imports raw materials the exchange rate will be important
Answer:
The answer is
Explanation:
Number of Production Units
The most basic factor affecting profit in any business is the number of production units. This may be acres for the farmer, cows for the rancher, or factories for the industrialist. It doesn’t matter what business you are in, your potential for profit (or loss) is closely tied to your number of production units. If you have an enterprise that is generating $50 of profit per acre and you could double the number of acres, then you would have twice as much profit. Losses, unfortunately, work the same way; more of a loser just loses more.
Production per Unit
The productivity of your land and livestock also has an impact on profit. Productivity is measured in yield per acre, weaned calf crop percentage, and weaning weight for starters. This is an area where farmers and ranchers tend to concentrate. When profitability wanes, it is natural to try to increase productivity. It is important to remember that production per unit is only one factor affecting profitability. It is also hard to increase production without also increasing costs.