A new treatment is presented of a classical economic problem, one which occurs in many forms, as bargaining, bilateral monopoly, etc. It may also be regarded as a nonzero-sum two-person game. In this treatment a few general assumptions are made concerning the behavior of a single individual and of a group of two individuals in certain economic environments. From these, the solution (in the sense of this paper) of classical problem may be obtained. In the terms of game theory, values are found for the game. См. также: Two-person cooperative games, автор - Джо Нэш.

A typical problem in cost-volume-profit analysis involves the comparison of alternative methods of production, where the methods have different ratios of fixed to variable costs. The computation of the break-even points and the examination of the relative sensitivity of each method to changes of volume at a fixed sales price are standard procedures. Consideration is frequently given also to possible changes in sales price, coupled with corresponding changes of volume, and to their resulting effect on segment profit or net income. The purpose of this article is to show that the direction of the change in net income can be predicted in terms of the contribution margin ratio and the market elasticity of demand for the product. The coupling of the elasticity concept with cost-volume-profit analysis also provides a decision rule which indicates whether a company, having a particular cost structure, should raise or lower its prices in order to increase net income. The author says that the decision rule can provide an unambiguous indication of the direction in which net income will change as the result of a price change, so long as that change is small.

ABSTRACT: Relevant costing and incremental analysis are often-used decision-making tools. Irrelevant costs are excluded from any incremental decision-making problem because they are supposed to have equal effects on all the available alternatives. This paper demonstrates that when utility analysis is introduced, and when uncertainty exists, the "irrelevant" items may become relevant as the decision-maker's perspective shifts along his preference function. This phenomenon is especially true when large dollar "irrelevant" items prevail. The problem is further compounded when deciding the proper datum for the utility function and for the various costs and revenues.