UNIT - III

PRODUCTION, COST NALYSIS,

MARKET STRUCTURES AND PRICING

 UNIT-III MARKETS AND NEW BUSINESS
ENVIRONMENT
• Production and factors of production, Production function with
one variable input, Production function with two variables inputs
Cob - Douglas production function and Returns to scale,
Economies of scale(internal & external)
• Cost concepts- Types of cost and Short and Long run cost
functions, its features
• Markets- types of markets, Market competition and its features-
Features of perfect competition, Monopoly and monopolistic,
competition oligopoly. Price output determination in perfect,
competition
• Pricing objectives, Policies of pricing, methods of pricing, Product
life cycle based pricing
• BEA and its significance importance and CVP
 PRODUCTION
Production is the process of transforming or converting inputs into
outputs (goods or services).
Ex: Raw material, land, labour, capital and organisation and others
are the inputs
An organisation needs to make an optimum utilisation of these
factors to achieve maximum output.
Production can be defined as “the process of converting the inputs
into outputs”. Inputs include land, labour and capital, whereas
output includes finished goods or services.
• “Production can be defined as “an organised activity of
transforming physical inputs (resources) into outputs (finished
products), which will satisfy the products needs of the
society.” -J.R.
Parkinson

• “Production is an activity whether physical or mental, which is

directed to the satisfaction of other people’s wants through
exchange.” -J.R.
Hicks
 PRODUCTION FUNCTION

Production function can be defined as a technological

relationship between the physical inputs and physical
output of the organisation.
“Production Function is the technological relationship,
which explains the quantity of production that can be
produced by a certain group of inputs. It is related with a
given state of technological change.” -Samuelson
Qp = f (L, L1, C, O,T)
 ASSUMPTIONS OF PRODUCTION FUNCTION

• Production function is related to a specific time period.

• The state of technology is fixed during this period of time.
• The factors of production are divisible into the most viable
units.
• There are only two factors of production, labour and capital.
• Inelastic supply of factors in the short-run period.
 FACTORS OF PRODUCTION

Factors of production are the inputs that are used for

producing the final output with the main aim of earning an economic
benefit.
Land: It refers to all natural resources which are free gifts of nature.
It includes all gifts of nature available to mankind- both on the
surface and under the surface. The payment for land is rent. Ex: soil,
rivers, water, forests, mountains, mines, deserts, seas, climate, etc.
Labour: Human efforts done mentally or physically with the aim of
earning income is known as labour. labour is a physical or mental
effort of human being in the process of production. The payment for
labour is wage (s). Ex: Skilled, Semi skilled, Unskilled, Professional
Capital: All man-made goods or resources which are used for further
production process are included in capital. The payment for capital is
interest. Ex: factories, machinery, tools, equipment, raw materials, etc.
Entrepreneur: An entrepreneur is a person who organises the other
factors and undertakes the risks and uncertainties involved in the
production. He/She hires the other three factors, brings them together,
organises and coordinates them so as to earn maximum profit. The
payment for entrepreneur is profit.
Ex: Mr. X who takes the risk of manufacturing television sets will be
called an entrepreneur.
Technology
 CONCEPTS OF PRODUCTION

Total production: It refers to the total of output produced in a

given period
TP= AP x QL
Average Production: It refers to the relationship between the
total production and quantity of labour of output produced in a
given period.
AP= TP/QL
Marginal production: It refers to the additional products
produced results of change in labour in a given period.
MP= Difference in TP/ Difference in QL
 TYPES OF PRODUCTION

Production as cultivation: Production may take the form of

cultivation. E.g.: the farmer plows, irrigates, weeds and finally as the
end harvests his crop say wheat.
Production as extraction: Production may also take the form
of taking out certain goods which are already made by nature.
E.g.: The coal from the earth and fish from the sea.
Production as manufacturing: Production may take the form
of changing one commodity into another. E.g.: the production of a
table from wood.
 RETURNS TO SCALE

• Returns to scale implies the behaviour of output when all the

factor inputs are changed in the same proportion given the
same technology.
• In other words, the law of returns to scale explains the
proportional change in output with respect to proportional
change in inputs.
There are three aspects of the laws of returns:
1. ‰Increasing returns to scale
2. ‰Constant returns to scale
3. ‰Diminishing returns to scale
1. Increasing Returns to Scale
It is a situation in which output increase by a greater proportion
than increase in factor inputs. For example, to produce a
particular product, if the quantity of inputs is doubled and the
increase in output is more than double, it is said to be an
increasing returns to scale.
2. Constant Returns to Scale
A constant return to scale implies the situation in which an
increase in output is equal to the increase in factor inputs. For
example in the case of constant returns to scale, when the
inputs are doubled, the output is also doubled.
3. Decreasing or Diminishing Returns to Scale
Diminishing returns to scale refers to a situation in which output
increases in lesser proportion than increase in factor inputs.
For example, when capital and labour are doubled, but the
output generated is less than double, the returns to scale would
be termed as diminishing returns to scale
 LAW OF RETURNS TO SCALE SCHEDULE
Output Laws
Labour (L) Capital (K) % Increase % Increase
(units) applicable

1 3 - 50 - -

2 6 100 120 140 Increasing

4 12 100 240 100 Constant

8 24 100 360 50 Decreasing

 ECONOMIES OF SCALE(Advantages)

Production may be carried on a small scale or large

scale by a firm. When a firm expands its size of production by
increasing all the factors, it secures certain advantages known
as economies of production.
Marshall has classified these economies of large-scale
production into two. Such as
• Internal economies
• External economies
 INTERNAL ECONOMIES
Internal economies are those, which are opened to a single
factory or a single firm independently of the action of other
firms. They result from an increase in the scale of output of a
firm and cannot be achieved unless output increases. Hence,
internal economies depend solely upon the size of the firm and
are different from one to another firms.
Internal economies may be of the following types.
a) Technical Economies
b) Managerial Economies(Mktg,Finance,HR,Production)
c) Marketing Economies
d) Financial Economies
e) Economies of Research
f) Economies of welfare
a) Technical Economies: Technical economies arise to a firm
from the use of better machines and superior techniques of
production. As a result, production increases and per unit cost
of production falls.
b) Managerial Economies: These economies arise due to better
and more elaborate management, which only the large size
firms can afford. There may be a separate head for
manufacturing, assembling, packing, marketing, general
administration etc.
c) Marketing Economies: The large firm realise marketing or
commercial economies in buying its requirements and in
selling its final products. The large firm generally has a
separate marketing department. It can buy and sell on behalf
of the firm, when the market trends are more favourable.
d) Financial Economies: The large firm is able to secure the
necessary finances either for fixed capital purposes or for working
capital needs more easily and cheaply. It can barrow from the
public, banks and other financial institutions at relatively cheaper
rates.
f) Economies of Research: A large firm possesses larger resources
and can establish it’s own research laboratory and employ trained
research workers. The firm may even invent new production
techniques for increasing its output and reducing cost.
g) Economies of welfare: A large firm can provide better working
conditions in-and out-side the factory.
Ex: Subsidized canteens, recreation room, quarters for employees,
educational and medical facilities tend to increase the productive
efficiency of the workers, which helps in raising production and
reducing costs.
 EXTERNAL ECONOMIES
External economies are those benefits, which are shared by a
number of firms or industries when the scale of production in
an industry or groups of industries increases.
Business firm enjoys a number of external economies. Such as
a)Economies of Concentration
b)Economies of Information
c) Economies of Welfare
d) Economies of Disintegration
a)Economies of Concentration: When an industry is
concentrated in a particular area, all the member firms
get some common economies like skilled labour,
transport and communications, banking and financial
services, supply of power and benefits from subsidiaries.
b)Economies of Information: The industry can set up an
information centre which may publish a journal and pass
on information regarding the availability of raw
materials, modern machines, export potentialities and
provide other information needed by the firms.
c) Economies of Welfare: An industry is in a better
position to provide welfare facilities to the workers. It
may get land at concessional rates and procure special
facilities from the local bodies for setting up housing
colonies for the workers.
 Production function—Input-Output
Relationship
• Qp=F{L,L1,C,O,T}
 Production function with one variable input

Consider the simplest two input production process - where one

input with a fixed quantity and the other input with is variable
quantity. Suppose that the fixed input is the service of machine
tools, the variable input is labour, and the output is a metal
part. The production function in this case can be represented
as:
Q = f (C, L)

C Capital
L Labour
 Production Function with Two Variable Inputs
ISOQUANTS
The term Isoquants is derived from the words ‘iso’ and ‘quant’–
‘Iso’ means equal and ‘quant’ implies quantity. A family of
iso-product curves can represent a production function with
two variable inputs, which are substitutable for one another
within limits.
Isoquants are the curves, which represent the different
combinations of inputs producing a particular quantity of
output.
Q= f (L, K)
Where, ‘Q’, the units of output is a function of the quantity of
two inputs ‘L’ and ‘K’
Assumptions:
• There are only two factors of production, viz. labour and
capital.
• The two factors can substitute each other up to certain limit
• The shape of the isoquant depends upon the extent of
substitutability of the two inputs.
• The technology is given over a period.

Combinations Labour (units) Capital (Units) Output (quintals)

A 1 10 50

B 2 7 50

C 3 4 50

D 4 4 50

E 5 1 50
 Isoquants(Equal Quantity)
• Downward slopping
• Convex to the origin
• Do not intersect with each other
• Do not touch axes
Isoquants where input factors are perfect substitutes
Isoquants where input factors are not perfect
substitutes
Isoquants each showing different volumes of output
 Isocosts
• It refers to the cost curve that represents the
combination of inputs that will cost the
producer the same amount of money.

• In simple words each isocosts denotes a

particular level of total cost for a given level of
production.
Isocost each representing different level of
total cost
 Least cost combination of inputs

• The manufacturer has to produce at lower

costs to attain higher profits. The concept of
isoquants and iso costs are used to determine
the input usage that minimises the cost of
production.
Least cost combination of inputs
MRTS(Marginal rate of technical
substitution)

Combinations Capital Labour MRTS

A 1 20

B 2 15 1:5

C 3 11

D 4 8

E 5 6

F 6 5
 MRTS
• It refers to the rate at which one input factor is
substituted with another to attain a given level
of output.

• MRTS = change in one input/change in

another input
Production function where input factors are
multiple
• Complex activity
 Other popular Production functions
• Cobb-Douglas production function
• Leontief production function
 COST AND COST CONCEPTS

• For the production of commodities and services, organisations

incur various expenditures on different activities.
Ex: Purchase of raw material, payment of salaries/wages to the
labour and purchase or leasing machines and building and
other expenditure called cost of production.
• In other words, cost refers to the amount of resources required
for the production of commodities and services.
 TYPES OF COST
Long run and short run costs
Fixed and variable cost
Semi fixed or semi variable cost
Marginal cost
Controllable and noncontrollable cost
Opportunity cost and outlay cost
Incremental and sunk cost
Explicit and implicit cost
Out of pocket and book cost
Replacement and historical cost
Past and future cost
Separable and joint cost
• Accounting and economic cost
• Urgent and postponable cost
• Escapable and unavoidable cost
Basis of distinction among cost concept
Cost concept Basis of distinction
Shortrun Vs Longrun Time factor involved
Variable Vs fixed cost Degree of variability
Opportunity Nature of sacrifice
Past Vs Futurecost Degree of anticipation
separable Vs joint cost Traceability of unit of operation
out of pockets Vs Book cost Involvement of cashflow
Incremental Vs Sunk cost Increase in the level of activity
Escapable Vs Unavoidable cost Degree of compulsion
Controllable Vs Noncontrollable cost Degree of controllability
Replacement Vs Historical cost Timing of valuation
Urgent Vs Postponable cost Degree of urgency
 Short run Costs
• Formulating policies
• Expense control
• Profit prediction
• Pricing
• promotion
 Costs in the short run

AFC(TFC/ AVC(TVC/ ATC(TC/

Output a TFC b TVC c Total cost output) output) output) MC

0 100 0 100 100

1 100 30 130 100 30 130 30

2 100 54 154 50 27 77 24

3 100 72 172 33.3 24 57.3 18

4 100 96 196 25 24 49 24

5 100 150 250 20 30 50 54

6 100 216 316 16.6 36 52.6 66

7 100 320 420 14.2 45.7 69.9 104

 LONG RUN COST
• In long run, the total cost of the production will change as per
changing in the fixed cost
• The variable cost of the production also changes as per
changes in prices of variable cost in the future
• AFC, ATC, AMC also changes as per changes in cost
Long run average cost curves
 Changes possible in Long run
• Upgrade/Scale up production
• Enter new markets
• Import technology
• Initiate changes in labour(Skilled,Professional
WF)

• Time available
Optimum size of the firm
Features or Elements of Market
• Commodity or product or service
• Buyers
• Sellers
• Area or place
• Close contact between buyers and sellers
Factors governing market structure :
• Number of buyers
• Number of sellers
• Product differentiation
• Conditions of entry and exit
 Different Market Structures

Market structure describes the competitive environment in the

market for any good or service. A market consists of all firms
and individuals who are willing and able to buy or sell a
particular product. This includes firms and individuals
currently engaged in buying and selling a particular product,
as well as potential entrants.
The determination of price is affected by the competitive
structure of the market. This is because the firm operates in a
market and not in isolation. In marking decisions concerning
economic variables it is affected, as are all institutions in
society by its environment.
 CLASSIFICATION OF MARKETS
Based on Area Based on time Based on Volume
• Local • Very short run • Whole sale
• Regional • Short run market
• National • Long run • Retail market
• International • Very long run

Based on competition Based on regulations Based on transactions

• Perfect competition • Regulated •Spot market
• Imperfect completion • Un regulated •Future market
Monopoly
Monopolistic
Oligopoly
 Perfect Competition
Perfect competition refers to a market structure where
competition among the sellers and buyers prevails in its
most perfect form.
In a perfectly competitive market, a single market price
prevails for the commodity, which is determined by the
forces of total demand and total supply in the market.

Ex: Agricultural products, Milk , Meat, and some of the public

services , etc...
Characteristics of Perfect market:
Large number of buyers and sellers
Homogeneous products
No price discrimination
Free entry and exit from the market
Perfect knowledge
Indifference
Non-existence of transport
Perfect mobility of factors of production
Horizontal demand curve (Price of product)
 Characteristics of Perfect Competition
1. A large number of buyers and sellers: The number of
buyers and sellers is large and the share of each one of them
in the market is so small that none has any influence on the
market price.
2.Homogeneous product : The product of each seller is
totally undifferentiated from those of the others.
3. Free entry and exit: Any buyer and seller is free to enter
or leave the market of the commodity.
4. Perfect knowledge: All buyers and sellers have perfect
knowledge about the market for the commodity.
5. Indifference: No buyer has a preference to buy from a
particular seller and no seller to sell to a particular buyer.
6.Non-existence of transport costs : Perfectly competitive
market also assumes the non-existence of transport costs.
7.Perfect mobility of factors of production: Factors of
production must be in a position to move freely into or out
of industry and from one firm to the other.
 MONOPOLY
The word monopoly is made up of two words, Mono and
Poly. Mono means single while poly implies seller. Thus
monopoly is a form of market organization in which there is
only one seller of the commodity. There is no close
substitutes for the commodity sold by the seller.
Pure monopoly is a market situation in which a single firm
sells a product for which there is no good substitute.
Ex: AICTE (All India Council for Technical Education)
 Features of Monopoly
1. Single person or a firm
2.No close substitute
3. Large number of Buyers
4. Price Maker
5. Supply and Price
6.Downward Sloping Demand Curve
 Features of Monopoly
1. Single person or a firm: A single person or a firm controls
the total supply of the commodity. There will be no
competition for monopoly firm. The monopolist firm is the
only firm in the whole industry.
2.No close substitute: The goods sold by the monopolist shall
not have closely competition substitutes. Even if price of
monopoly product increase people will not go in far
substitute.
Ex: If the price of electric bulb increase slightly, consumer
will not go in for kerosene lamp.
3. Large number of Buyers: Under monopoly, there may be
a large number of buyers in the market who compete among
themselves.
4.Price Maker: Since the monopolist controls the whole
supply of a commodity, he is a price-maker, and then he can
alter the price.
5.Supply and Price: The monopolist can fix either the supply
or the price. He cannot fix both. If he charges a very high
price, he can sell a small amount. If he wants to sell more,
he has to charge a low price. He cannot sell as much as he
wishes for any price he pleases.
6.Downward Sloping Demand Curve: The demand curve
(average revenue curve) of monopolist slopes downward
from left to right. It means that he can sell more only by
lowering price.
 MONOPOLISTIC COMPETITION

Perfect and Monopoly competition are rate phenomena in the

real world. Instead, almost every market seems to exhibit
characteristics of both perfect competition and monopoly.
Hence, in the real world it is the state of imperfect
competition lying between these two extreme limits that
work.
Edward. H. Chamberlain developed the theory of
monopolistic competition, which presents a more realistic
picture of the actual market structure and the nature of
competition.
1. Existence of Many firms: Industry consists of a large number of
sellers, each one of whom does not feel dependent upon others.
Every firm acts independently without bothering about the
reactions of its rivals.
2. Product Differentiation: Product differentiation means that
products are different in some ways, but not altogether so. The
products are not identical but the same time they will not be
entirely different from each other. Ex: Toothpaste produced by
various firms.
3. Large Number of Buyers: There are large number buyers in the
market. But the buyers have their own brand preferences. So the
sellers are able to exercise a certain degree of monopoly over
them.
4. Free Entry and Exist of Firms: As in the perfect competition, in
the monopolistic competition too, there is freedom of entry and
exit.
5. Selling costs: Since the products are close substitute much effort is
needed to retain the existing consumers and to create new demand.
6.Imperfect Knowledge: Imperfect knowledge about the product
leads to monopolistic competition. If the buyers are fully aware of
the quality of the product they cannot be influenced much by
advertisement or other sales promotion techniques.
7. The Group: Under perfect competition the term industry refers to
all collection of firms producing a homogenous product. But under
monopolistic competition the products of various firms are not
identical through they are close substitutes.
 OLIGOPOLY

The term oligopoly is derived from two Greek words, Oligos

means a few, and pollen means seller. Oligopoly is the form
of imperfect competition where there are a few firms in the
market, producing either a homogeneous product or
producing products, which are close but not perfect
substitute of each other.
 Characteristics of Oligopoly
1. Few Firms: There are only few firms in the industry. Each firm
contributes a sizeable share of the total market. Any decision taken
by one firm influence the actions of other firms in the industry.
2. Interdependence: As there are only very few firms, any steps taken
by one firm to increase sales, by reducing price or by changing
product design or by increasing advertisement expenditure will
naturally affect the sales of other firms in the industry.
3. Indeterminate Demand Curve: The interdependence of the firms
makes their demand curve indeterminate. When one firm reduces
price other firms also will make a cut in their prices.
4. Advertising and selling costs: Advertising plays a greater role in
the oligopoly market when compared to other market systems.
 PRICE OUTPUT DETERMINATION
• Perfect Competition Market-Short run
Perfect Competition Market-Long run
Monopoly Competition Market – Short Run
Monopoly Competition Market-Long run
 PRICING
Formulating pricing policies and setting the price are important
aspects of managerial decision making.
Price is the source of revenue which the firm seeks to maximise.
It is also used to expand its market.
Pricing is the process whereby a business sets the price at which
it will sell its products and services, and may be part of the
business's marketing plan.
In setting prices, the business will take into account the price at
which it could acquire the goods, the manufacturing cost, the
market place, competition, market condition, brand, and
quality of product.
 OBJECTIVES OF PRICING
The objectives of pricing should consider:
• The financial goals of the company (Ex: Profitability)
• To increase the sales
• The fit with marketplace realities (will customers buy at that
price?)
• The extent to which the price supports a product's market
positioning and be consistent with the other variables in
the marketing mix (4Ps).Product,Price,Place,Promotion
• The consistency of prices across categories and products
(consistency indicates reliability and supports customer
confidence and customer satisfaction)
• To meet the competition
• To satisfy the customers
PRICING METHODS
 1.Cost Based Pricing
• Cost Plus pricing. Full cost . Mark up pricing
• (Actual cost 10+% of profit)=price
• Marginal cost pricing
• (fully covers VC and contributes partial
recovery of FC)

• Social cost based pricing

 2.Competition based pricing
• Sealed bid pricing
• Going rate pricing
• Limit pricing
 3.Strategy based Pricing
• Price matching
• Promoting brand loyalty
• Time to time pricing
• Promotional strategy
• Target pricing
 4.Demand oriented Pricing
• Price discrimination
• Perceived value pricing
• Priority pricing
 5.Other pricing strategies
• Market skimming
• Market penetration pricing
• Two part pricing
• Block pricing
• Commodity bundling
• Peak load pricing/seasonal pricing
• Cross subsidization
• Transfer Pricing
 BEP
• When the company is in no profit and no loss
zone it is called as BEP
 BREAKEVEN ANALYSIS (BEA)/BEP

The study of cost-volume-profit relationship is often referred as

BEA.
The term BEA is interpreted in two senses.
 In its narrow sense, it is concerned with finding out BEP; BEP
is the point at which total revenue is equal to total cost. It is
the point of no profit, no loss.
 In its broad determine the probable profit at any level of
production.
 TERMINOLOGY USING IN BEA
• Fixed cost
• Variable cost
• Total cost
• Total revenue
• Marginal cost
• Contribution
• Contribution margin ratio
• Profit
• Margin of safety
• Angle of incidence
• Profit volume ratio (P/V Ratio)
• Break-Even-Point
GRAPHICAL PRESENTATION OF BEP
BREAK - EVEN CHART (BEC)
 ASSUMPTIONS
 All costs are classified into two – fixed and variable.
 Fixed costs remain constant at all levels of output.
 Variable costs vary proportionally with the volume of
output.
 Selling price per unit remains constant in spite of
competition or change in the volume of production.
 There will be no change in operating efficiency.
 There will be no change in the general price level.
 Volume of production is the only factor affecting the cost.
 Volume of sales and volume of production are equal. Hence
there is no closing stock.
 There is only one product to produce.
 In case of multiple products multiple BEPs exist.
 Key terms
• Fixed cost: rent,insurance
premium,salaries,depreciation
• Variable cost:wages,raw material cost,overhead
costs,direct & operating expensese
• Total cost=FC+VC
• Total revenue=sppu*no of units sold
• Contribution margin:difference between SPPU
and VCPU…(SPPU-VCPU)
• Contribution margin ratio: it is the ratio b/w
CPPU and SPPU
• Profit=Contribution – fixed cost
• Margin of safety(units/volume)=The excess of
actual sales minus BEP sales
• Margin of safety(Value/Rupees)= The excess of
actual sales(Rs) minus BEP sales(Rs)
• P/V ratio = ratio b/w contribution and sales
• A firm Fixed cost is 10000,selling price is 5 and
variable cost is 3
1.Determine in Volume
• BEP(units)= FC/Contribution per unit
• CPPU=SPPU minus VCPR
• 5-3=2
• 10000/2=5000 units
2.Determination in value
BEP in value/Rs=FC/Contribution margin Ratio
CMR=SPPU-VCPU/SP
2/5
1000/2/5=25000

3.Calculate total revenue

5000*5=25000
4.Calculate MOS considering actual production
as 8000
MOS=actual sales – BEP sales
8000-5000
3000=MOS
• A high-tech rail can carry 36000 passengers
per annum @ a fare of Rs.400.The variable
cost is 150 and the fixed costs are 2500000 per
year.
1.BEP in terms of No.of passengers/volume
2.In terms of fare collection/value

Fixed cost is 3700000

• S enterprises deal supply of hardware parts

YEAR 1 Year 2

sales 50000 120000

Fixed cost 10000 20000

Variable cost 30000 60000

1. The PV ratio of matrix books Ltd Rs. 40% and the margin of
safety 30%. You are required to work out the BEP and Net
Profit. If the sales volume is Rs. 14000/-

2. A Company reported the following results for two periods.

Period Sales Profit

I Rs. 20,00,000 Rs. 2,00,000
II Rs. 25,00,000 Rs. 3,00,000
Ascertain the BEP, PV ratio, fixes cost and Margin of Safety.
 MERITS DEMERITS
Information provided by the BEC can be BEC presents only cost volume profits. It
understood more easily than those ignores other considerations such as
contained in the profit and Loss account. capital amount, marketing aspects.
BEC discloses the relationship between It is assumed that sales, total cost and
cost, volume and profit. It reveals how fixed cost can be represented as straight
changes in profit. So, it helps management lines. In actual practice, this may not be
in decision-making. so.

It is very useful for forecasting costs and It assumes that profit is a function of
profits long term planning and growth. output. This is not always true.
The chart discloses profits at various A major draw back of BEC is its inability
levels of production. to handle production.
It serves as a useful tool for cost control. It is difficult to handle selling costs such
as advertisement and sale promotion in
BEC.
It can also be used to study the Fixed costs do not remain constant in the
comparative plant efficiencies of the long run and semi-variable costs are
industry. completely ignored.
THANK YOU