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For example, a soda bottle can have different packaging variations, flavors, nutritional values. It is possible to optimize a product by making minor adjustments. Typically, the goal is to make the product more desirable and to increase marketing metrics such as Purchase Intent, Believability, Frequency of Purchase, etc.
In economics a trade-off is expressed in terms of the opportunity cost of a particular choice, which is the loss of the most preferred alternative given up. [2] A tradeoff, then, involves a sacrifice that must be made to obtain a certain product, service, or experience, rather than others that could be made or obtained using the same required resources.
It is a product of "scientific specialization and technical differentiation" that seems to be a characteristic of Western culture. [1] Rationalization is the guiding principle behind bureaucracy and the increasing division of labor , and has led to an increase in both the production and distribution of goods and services .
For example, an economist might say that a policy change is an allocative improvement as long as those who benefit from the change (winners) gain more than the losers lose (see Kaldor–Hicks efficiency). An allocatively efficient economy produces an "optimal mix" of commodities.
Price optimization utilizes data analysis to predict the behavior of potential buyers to different prices of a product or service. Depending on the type of methodology being implemented, the analysis may leverage survey data (e.g. such as in a conjoint pricing analysis [7]) or raw data (e.g. such as in a behavioral analysis leveraging 'big data' [8] [9]).
Managerial economics deals with the problems individual organisations face, such as the organisation's main objectives, the demand for its products, the organisation's price and output decisions, available substitutes and giveaways, the supply of inputs and raw materials, the target or potential consumers of its products, etc. [3]
Productive efficiency is an aspect of economic efficiency that focuses on how to maximize output of a chosen product portfolio, without concern for whether your product portfolio is making goods in the right proportion; in misguided application, it will aid in manufacturing the wrong basket of outputs faster and cheaper than ever before.
In microeconomics, economic efficiency, depending on the context, is usually one of the following two related concepts: [1] Allocative or Pareto efficiency : any changes made to assist one person would harm another.