Selling cost, meaning, equilibrium firm of selling cost

In this ,, concept of selling cost , meaning, equilibrium firm of selling cost, Business economics for b.com bba ,mba ,m.com and others

1. Selling cost Kulsoomidrisi

2. Selling cost The total amount of money spent on on advertisement and publicity for pushing the sale of the product is called selling cost In case of perfect competition, product of all producers are homogeneous
So they do not feel the necessity of any advertisement Under monopolistic competition, selling cost are not merely informative but are essential for sales promotion and manipulation of demand

3. Definition Selling cost are costs incurred in order to alter the position or shape of the demand curve for the product Selling costs include all expenses incurred to increase the demand for the goods

4. 👉Assumptions SELLING COST ARE BASED ON ASSUMPTIONS 1.Buyers demand and taste can be changed
2. Buyers do not have full knowledge about the different types of the product

5. Selling cost The cost which aim to attract the customer’s to the products
Selling cost include all kinds of expenses and advertisement in newspaper, magazines etc
The purpose of selling cost is to push the demand to the product Those costs which are incurred in order to make the commodity worthy of meeting the requirements of customers
Production costs include such expenditure as production of the product transportation, storage, delivery to customers etc
Purpose , increase the supply of the product Production cost Difference B/W selling cost and production cost

6. Shape of the Average selling cost curve The average selling cost curve which shows the average cost per unit of selling any given amount of output In fig in the beginning proportionate increase in sales is more than the increase in selling cost but after proportionate increase In sales is less than the increase in selling cost it implies that upto a point per unit selling cost go on diminishing but after a point the same tend to increase.

7. Selling costs and firm’S equilibrium Selling cost influenced Equilibrium price Output adjustment Of a firm under monopolistic competition. Average selling cost Is equal to the vertical Distance between APC And ACQ . The new damand curve is AR² It is obtained After Making advertisement .

8. Output is on x axis and costs on y-axis. Before incurring selling cost let’s suppose that price is shown by AR¹ in this situation equilibrium output is OQ. It is assumed that at this output MC=MR so firm is earning super normal profit ABCD
After, firm spends 15000 on advertisement consequently total cost will increase also increase average cost.so ACS is the new average cost curve that includes, besides average cost of production, selling cost as well and firm earn profit EFGH

9. Thank you 🎉🎉