Marginal analysis when Ford introduces a vehicle to the range of existing ones

Marginal Analysis
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To: From: Date: Re: Marginal analysis when Ford introduces a vehicle to the range of existing ones
I write to highlight the case for using marginal analysis when a new product is introduced in the market where comparing the marginal revenues and costs is considered in decision making.
An example where marginal analysis is applicable is the case where companies make decisions on whether when a new product or service will be introduced to the range of existing ones. Analysis of the situation focuses on determining whether it is acceptable to introduce a new product such as a new car model by Ford when this does not affect the demand of existing vehicles by the company. Using marginal analysis case differs from scenarios where one only considers impact on the sales, as both marginal benefits and costs are considered. Focusing solely on marginal analysis introducing the new car model ought to be accepted when the marginal revenue is higher than the marginal costs.
To determine how much to spend on advertising, it is necessary to take into account the marginal benefits of increasing the advertising and the change in variable costs of the same. In marginal analysis, fixed costs are excluded because, they exist constantly amount before or after the decision are made and they have no effect on the decision. The variable costs of a product or service are generally easy to identify with the products and services. The same does not happen w...