Unit 4 Scenario Essay Example | Topics and Well Written Essays - 500 words

Unit 4 Scenario - Essay Example The duration of the lot starts from 6pm to midnight, say, 6 hours per day. Moreover, this parking lot will be guided by a staff member at a cost of $10 per hour. It means that the staff needs to be paid an amount of $60 per day, and $1800 per month. Other than this, an additional cost will be charged for the supplementary usage of parking lot. Therefore, in order to evaluate and adopt the most appropriate decision in respect of the parking and maintenance cost, it is necessary to analyze the marginal revenue and marginal costing technique. Under marginal costing, only variable costs are charged to cost units. â€Å"Comparable to any profit-maximizing firm, a perfectly competitive firm produces the quantity of output in the short run that generates the maximum difference between total revenue with total cost, which is economic profit. This profit maximizing level of production is also achieved by the equality between marginal revenue and marginal cost. At this production level, the firm cannot increase profit by changing the level of production. The analysis of marginal revenue and marginal cost can be achieved through a table of numbers or with marginal revenue and marginal cost curves† (Marginal Analysis, 2007). The solution is proposed by the bank was to charge a higher cost for parking lot. This is because, through higher charging for parking, it is possible to reduce the problem related with the parking to a certain degree. The main reason for the higher charge set by the bank is that to make it possible the availability of suitable parking facilities. Whenever the charge for parking increases, then the time spent for parking will automatically be reduced. Due to this, it is possible to make the parking lot conveniently at any time effectively. In addition to this, in order to overcome this specific problem, it is necessary to consider the concept of perfect competition and