Anonymous asked in Business & FinanceInvesting · 1 month ago

Why does the unit cost decrease, when demand for their product increase? AND calculating market share of a company?

1 Answer

  • GA41
    Lv 7
    1 month ago

    Because direct cost increase directly per unit, but indirect costs do not.   Indirect cost would include things like rent.  If I'm paying $1000 for rent and sell 1000 units, the cost for rent per unit is $1.00.  If I sell 2000 units, the cost for rent per unit is $0.50.  Market share would be calculated using the revenue from that particular market.  If the total market demand is $10,000,000 and your company is selling $1,000,000 of product, then your share of the market is $1,000,000/$10,000,000 x 100 = 10% market share.

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