Ford
Motor Company and all other businesses face the economic challenge of
scarcity. Scarcity occurs because consumers and businesses have unlimited wants
and needs, but limited resources. Ford uses the Four Factors of Production
(land, labor, entrepreneurship, and capital) to operate their
business efficiently. Without these resources, the company would not be able to
produce or make a profit. These resources are used to manufacture
their cars, employ workers, sell and advertise their products, and in
countless other ways. However, Ford may not have enough money to finance all of
these expenses. Ford must make decisions on how to make intelligent choices
under scarcity to maximize their profit. CEO’s and other decision makers must use
Marginal Analysis in order to find the most beneficial balance between input and output,
or costs and expenses. They must find a point where the marginal cost is less
than or equal to the marginal benefit in order to be a successful company. To
decide how many cars to produce, they must determine the amount of cars that are
wanted and/or needed by their market. They must take into account the price it costs them for each
car to be manufactured, the profit that comes from each car sale, and other
factors. The marginal cost of producing one thousand cars to two thousand cars, or any unit of cars to the next additional unit, can be compared to determine production. Another factor in Ford’s economic
decisions is trade off. Trade off is sacrificing one economic goal for another,
and is an obstacle that every business and individual faces. Ford’s trade off
could include producing more capital or consumer goods, hiring or firing
workers, continuing or discontinuing production of a specific model of car, and
so on.
Apple uses incentives to promote
their product, the iPhone. The iPhone 6 was released a few days ago, so many consumers will most likely want the latest and greatest Apple
product. Apple along with phone carriers such as Verizon and Sprint give incentives
to buy Apple’s older products so that the company doesn't lose money by
manufacturing excess phones that no one will buy. For example, and iPhone 4s is
free with a two year Verizon contract, while the iPhone 6 is $200 with a two
year Verizon contract, and even more expensive without a contract. A customer on a
budget will have the incentive to purchase the iPhone 4s because it is less
expensive. On the other hand, a customer who is less concerned with cost may
have the incentive to buy the iPhone 6 because it is faster and has better
technology. Another way that incentives are used in terms of the iPhone is the use
of apps with in-app purchases. Apple gets you hooked on a fun and entertaining app
on your phone, and offers you extra lives in your game, commercial free radio, or
a number of other extra features for a seemingly small price. The cost of the consumer gaining these features is little to none for Apple, but you have the incentive
to spend the extra two or three dollars in the app store, which adds up in
terms of profit for the company. Even certain apps themselves charge money up
front in the app store. Apple makes the most helpful apps or the ones with the
features that you want the most expensive, and they make basic versions so you
can download them for free and see all of the features you are missing and have
incentive to buy the premium version of the app. Other extra costs to your
initial purchase of an iPhone include cases, jewels for the phone’s exterior,
headphones, and charging chords. The iPhone uses incentives to get you to
purchase the device itself, and then pay for extra features.
