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The Business World and the Natural World

As we begin to consider some parallels between the business world and the natural world, we can identify some very similar patterns in extinction, adaptation, and supply and demand in both. For example, an organism faces many challenges as it attempts to survive in the natural world, just as a business will struggle to succeed in the marketplace. When resources in the environment are limited, like consumers in the marketplace, organisms and businesses will compete. Those that can maximize their efficiency at production will succeed over those that cannot. Let's look at how the principles of economics determine production costs and the role that these costs play in the success of a business. (Complete the production costs tutorial before you proceed).

Part I
In this tutorial you learned about different types of costs faced by a business. Organisms face similar costs, and require common elements as building blocks: carbon, hydrogen, oxygen, and phosphorus. Plant tissues are composed primarily of long chains of sugars called cellulose. They have specialized machinery, chloroplasts, that capture energy from sunlight using pigments such as chlorophyll, and use it to build sugars in a process called photosynthesis. These sugars are used in many places throughout the plant, both structurally and metabolically.

Visit the Missouri Botanical Garden site http://www.mbgnet.net/bioplants/main.html for more information about the basic structure and function of plants. Read the contents on each link found at the left-hand side of the Web page, paying special attention to the content in "Plant Adaptations." After you view these resources provided on plant biology, apply the following economic terms to plants for the first part of this Case Assignment:

Short-run costs
•What is a fixed cost for a plant? What are variable costs?

Long-run costs
•What plant structures should be considered a part of its long-run costs?
•What plant structures are indivisible inputs (an input that cannot be scaled down to produce a small quantity of output)?

Part II
Now apply the questions above to an extinct business: choose either Kodak or Blockbuster. Do some independent research and use the production cost tutorial to address these questions:
•What were the fixed and variable costs for this business?
•What were some of their long-run costs, including divisible inputs?
•Who were their competitors?
•What were the factors that contributed to the decision to shut down production?

In the natural world, invasive species commonly displace species of organisms. Provide one example of an invasive species in your region that has imposed new competition to a native species and draw parallels between this example and the extinct business that you chose.

****Under each main section, use subtitles to organize your answers to the questions. For example:

Part I: Economics of Plant Production and Photosynthesis

Short-Run Costs

Long-Run Costs

Part II: Case Study: Production Costs for Kodak


Competition and the Shut-Down Decision

Extinctions: Parallels in the Business World


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Solution Preview

Part I: Economics of Plant Production and Photosynthesis

Short-Run Costs

A fixed cost for a plant is the cost of producing the roots and stem. The plant will need the roots and stem to survive, regardless of the number and size of leaves it produces, and regardless of whether it will produce any flowers or fruits.

A variable cost for a plant is the cost of producing leaves. The more leaves a plant has, the more photosynthesis can occur in the green leaves, and hence, the bigger and taller the plant can grow. Each leaf requires nutrients and energy to be produced. Note that a few species of plants that live in the desert have no leaves, or have small leaves that only show themselves after a rainfall. Another variable cost for the plant is the cost of producing fruits. The more fruits a plant produces, the more nutrients and energy the plant will need.

Long-Run Costs

The plant's roots and stem should be considered as part of its long-run costs. The plant invests nutrients and energy into producing the roots and stem, which should last a long time, such as for the entire ...

Solution Summary

The expert determines what the fixed costs for a plant are. The variable costs are determined. The question is answered in 652 words. Four sources are cited.