Final answer:
Managers can control aspects like production and pricing, known as explicit costs, but cannot control external factors like market structure, referred to as uncontrollable costs. Implicit costs also play a part, as they represent opportunity costs.
Step-by-step explanation:
To distinguish between controllable and uncontrollable aspects of revenue and costs, it's important to understand that managers can exercise control over certain aspects like production levels, pricing strategies, cost of inputs when they have alternatives, and operational efficiencies. These controllable aspects are often termed as explicit costs, which are clear, direct payments a company makes to run the business, such as wages, rent, and raw materials.
On the other hand, uncontrollable costs are those that a manager cannot easily change or influence, such as regulatory fees, exchange rates, or broader market dynamics. For example, the costs associated with market structure and competition, or unforeseen events, fall into this category. Additionally, there are implicit costs, which represent the opportunity costs of utilizing resources that the company already owns.
While managers strive to control costs to maximize profits, they cannot totally control all revenues and costs due to external factors such as market demands, competitive actions, and economic changes. The relationship between cost and revenue is also crucial, as it helps in identifying the profit-maximizing quantity to produce and the price at which to sell. However, this decision-making is complicated by the fact that firms operate within market structures that they cannot fully control.