16 Jan Close down your company. No one

ECN601 Economics

Week 1 Discussion

DQ1 Explain why the consideration of opportunity costs may be very relevant to a firm. How can opportunity costs affect a business decision? Use an example to support your answer.

DQ2 Think about a good or service for which you believe there has been a shift in demand or supply. Explain the reasons behind the shift and how that has influenced the equilibrium price.

ECN601 Economics

Week 2 Discussion

DQ1 In a perfectly competitive market where there is virtually no product differentiation, what do you think are the priorities or focus of a firm? How could a firm increase profits?

DQ2 Explain a situation you have observed (or read about) in which a firm made a decision considering irrelevant costs or did not consider relevant costs. What was the outcome of the decision, and what could have been done differently?

ECN601 Economics

Week 3 Discussion

DQ1 What market structure best describes the environment within which your organization operates? What challenges and opportunities would arise from higher and lower degrees of government intervention?

DQ2 According to Coase’s theory of the firm, why do firms exist? How do firms contribute to the efficiency of the market economy in ways that networks of independent contractors do not? How are the boundaries of the firm best established?

ECN601 Economics

Week 4 Discussion

DQ1 Identify a personal economic decision that was driven by a behavioral bias rather than by pure rational behavior. Given your understanding of behavioral economics, how would your decision differ today?

DQ2 In which cases would an organization benefit from using direct and indirect price discrimination? Does market structure influence the capacity of the firm to use price discrimination?

ECN601 Economics

Week 5 Discussion

DQ1 Read “7 Easy Ways to Use Game Theory to Make Your Life Better,” by Duronio. Reflect on your personal life experiences. Discuss a instance in your life in which you used game theory to earn or save money. Did you realize you were implementing game theory in the situation? How did the outcome benefit you at that moment and in the future?

DQ2 Using the Topic Material “Game Theory,” discuss your perspective on the use of game theory. How do “Nash equilibrium” and the idea of one “player” impacting another “player” within an organization affect the economic decisions and growth of an organization?

ECN601 Economics

Week 6 Discussion

DQ1 Discuss the importance of analyzing competition within an industry to better appeal to potential candidates. How can an organization use incentives to ensure it appeals to the employees it wants to hire?

DQ2 Discuss how wages are determined in labor markets. Explain how a monopsony market structure is affected by a price floor (minimum wage), and what is the effect of the monopsony of the local economy?

ECN601 Economics

Week 7 Discussion

DQ1 Identify one environmental factor or risk that affects the decision-making opportunities within your organization. Provide a brief description of the concerns and potential solutions for addressing the concerns or risks. Are there financial requirements that must be considered when processing decisions within a company?

DQ2 How does the financial strength of an organization influence decision making and outcomes?

ECN601 Economics

Week 8 Discussion

DQ1 Using the concept of “carry trade,” explain how a decrease in U.S. interest rates could affect the EUR/USD exchange rate. Given this change in exchange rate, how would firms and customers be affected?

DQ2 How do economists define a “bubble”? Provide an example of an asset market that you think could be the next bubble and explain why. (Do not use the examples cited in your textbook).

ECN601 Economics

Week 2 Assignment

Problems: Chapters 4 and 5

Complete the following problems from Chapters 4 and 5 in Managerial Economics: A Problem Solving Approach. For each question, write 250?500 word explanation clearly showing how you solved the problem.

Chapter 4: Problems 4?2 and 4?6

Chapter 5: Problems 5?4 and 5?5

APA style is not required, but solid academic writing is expected.

This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.

You are not required to submit this assignment to LopesWrite.

ECN601 Economics

Week 4 Assignment

Case Study: Generic Drug Pricing

Using the New York Times article, “Defiant, Generic Drug Maker Continues to Raise Prices,” conduct further research on the pricing strategies of generic drug manufacturers. In 750?1,000 words, analyze the pricing strategies and discuss the following:

Discuss the pricing decisions of generic drug manufacturers.

Evaluate the impact competitors and additional economic factors have on the results of the generic drug pricing strategies. What factors contribute to the advantages and disadvantages of various pricing strategies?

Discuss the social and financial implications of generic drug pricing decisions for various groups of stakeholders. What would be the socially optimum pricing strategy for the United States? What would be the socially optimum pricing strategy globally?

Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.

This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.

You are required to submit this assignment to LopesWrite. Please refer to the directions in the Student Success Center.

ECN601 Economics

Week 5 Assignment

Problems: Chapter 15

Complete the following Problems 15?1, 15?3, 15?4, and 15?6 in Chapter 15 in Managerial Economics: A Problem Solving Approach. Ensure that you clearly show how you solved these problems and provide a 250?500 word cumulative summary explaining all problems.

APA style is not required, but solid academic writing is expected.

This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.

You are not required to submit this assignment to LopesWrite.

ECN601 Economics

Week 6 Assignment

CLC – Incentive Plan

This is a Collaborative Learning Community (CLC) assignment.

Within your CLC team, discuss your current organization’s employee incentives and motivation strategies. Examine the individual organization’s compensation challenges and industry competition. Based on this discussion, teams will develop an incentive plan suitable for all participating members that encourages an organizational culture that motivates employees and evaluates their performance. Your incentive plan (1,000?1,250 words) must include:

An overview of the organization for which your team is developing an incentive plan.

A performance metric to monitor employee performance.

Motivation strategies and techniques to appeal to employees.

Incentive compensation to remain competitive within the industry.

Moral hazard affecting employees and the organization.

Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.

This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.

You are required to submit this assignment to LopesWrite. Please refer to the directions in the Student Success Center.

ECN601 Economics

Week 7 Assignment

Problems: Chapter 17

For this assignment, you are required to complete Individual Problems 17?2 and 17?6 at the end of Chapter 17 in Managerial Economics: A Problem Solving Approach. In addition, you are required to complete Group Problem G17?1: Uncertainty. As you are evaluating your current company, address the following decisions in your response (500?750 words):

What environmental factors and risks must be considered in the company’s decision?making process?

Evaluate cost factors influencing the company’s decision.

Determine strategies that would provide value to the outcome your company is seeking relating to this decision.

Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.

This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.

You are required to submit this assignment to LopesWrite. Please refer to the directions in the Student Success Center.

ECN601 Economics

Week 8 Assignment

Problems: Chapter 11

Review Group Problems G11?1: Exchange Rate Effect on Industry and G11?2: Exchange Rate Effects on Your Firm, located at the end of Chapter 11 in Managerial Economics: A Problem Solving Approach. Select one problem that relates to you and your current position in the work environment. Complete your response in 750?1,000 words. Support your response with personal experiences or examples.

Alternate Scenario: If you are in an industry that does not deal with any foreign exchange transactions, use the petroleum industry for this assignment. Imagine that you work for a domestic oil refinery, and answer either question G11?1 or G11?2. You do not work for an oil producer, but rather for a refinery, which turns crude oil into many different petroleum products, from jet fuel to gasoline, which are then sold to world markets. You have the option of purchasing crude oil from U.S. sources or from various foreign countries. You must purchase crude oil in order to make products that you can sell in the United States or in other countries.

Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.

This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.

You are required to submit this assignment to LopesWrite. Please refer to the directions in the Student Success Center.

ECN601 Economics

Week 6 Assignment

Peer-Evaluation Form

Complete the “Peer-Evaluation Form.” Points assigned to individuals in the group will be prorated based on the peer-evaluation.

Group Member:
List Names

Rating: 1–100

Comments:
Must be completed for each team member.

1. Your Name

2.

3.

4.

5.

6.

ECN601 Economics

Week 4 Exam 1

1Use the table provided to answer the following question. If hiring the fourth worker increases total product by 50 units and the price of each unit is $15:

ECN-601-Image 6.JPG

Enlarged View

The firm should not hire the fourth worker as MR

The firm should not hire the fourth worker as MR

Marginal revenue equals $150.

The firm should hire the fourth worker as MR>MC.

2The change in quantity demanded derived from a change in price is:

The movement along a demand curve

The movement along a supply curve

A shift in the demand curve

A shift in the supply curve

3 The difference between the minimum price the producer is willing to accept and the price the producer actually receives for a product is referred to as:

Market surplus

Market shortage

Consumer surplus

Producer surplus

4At a price for which quantity demanded exceeds quantity supplied, a __________ is experienced, which pushes the price __________ toward its equilibrium value.

Surplus; downward

Surplus; upward

Shortage; downward

Shortage; upward

5The opportunity cost of an action is:

Equal to the marginal cost of an action

Equal to explicit cost

Equal to the cost (value) of the next best alternative forgone

The total cost of an action

6An example of a price floor is:

Minimum wages

Rent controls in New York

Both A and B

None of the above

7A monopolistically competitive firm will tend to have a more elastic demand curve than a monopolist because:

The monopolist can more easily achieve abnormal profits.

The monopolist makes a more “unique” product.

The monopolistically competitive firm faces more competition.

Both B and C

8Use the table provided to answer the following question. If the firm hires eight workers, the total fixed costs is:

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$600

$1,200

$1,000

$6,200

9Peter’s Pizzeria sells both pizzas and soda. It wants to increase the sales of its pizzas. Assuming that the pizza and the sodas are complements, which of these strategies can it employ?

Increase the price of the soda.

Decrease the price of the soda.

Increase the quality of the pizza

Both B and C

10Use the table provided to answer the following question. How many units should the profit maximizing firm produce?

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Enlarged View

1

2

3

4

11A car dealership union negotiates a contract that dramatically increases the salaries of all salesmen. If one of the salesmen is thinking of changing careers to be a hardware salesman, his opportunity cost:

Would not be affected

Of becoming a hardware salesman would decrease

Of becoming a hardware salesman would increase

None of the above

12If the cross-price elasticity of demand between two goods is negative, then:

As the price of one good rises, the quantity demanded of the other good also rises.

The two goods are rarely used together by consumers.

The two goods are substitutes.

The two goods are complements.

13In an oligopoly, firms will tend to compete on the basis of price.

True

False

14An increase in the price of a complement shifts the demand curve to the:

Right

Left

It does not change the demand curve.

None of the above

15If the price elasticity of demand is 0.8 and the firm increases price, revenue will:

Increase

Decrease

Stay constant

Become zero, as they would lose all their customers

16A company invested $400,000 in a technology that reduced the overall costs of production by reducing their cost per unit from $2 to $1.85. Later, a manager has an opportunity to outsource production to another company at a cost per unit of $1.75. If you are the manager, you:

Should consider the $400,000 as a sunk cost, not relevant to the decision.

Should reduce his effort by ignoring any new developments and letting the production run as it is.

Should ignore the $400,000 fixed cost.

Both A and C

17An increase in the price of a substitute shifts the demand curve to the:

Right

Left

It does not change the demand curve.

None of the above

18A business produces 5,000 units per month. It spends $12,000 on raw materials. It pays wages of $20,000. Other costs include $50,000 for rent, paid by the month. In order to break even, the selling price per unit will have to be:

$25.20

$16.40

$20.30

$28.00

19A firm sells 1,000 units per week. It charges $70 per unit, the average variable costs are $25, and the average fixed costs are $65. In the short run, the firm should:

Shut down, as the firm is making a loss of $15,000 per week.

Shut down, as price is lower than average cost.

Continue operating, as the firm is covering all the variable costs and some of the fixed costs.

Shut down, as it is cost-effective to pay off the remaining fixed costs.

20Which of the following describes a firm?

Purchases labor hours from workers.

Borrows capital from investors.

Combines labor and capital to create production, moving them from their low value use to high value use.

All of the above

21Jim saw a decrease in the quantity demanded for his firm’s product from 8,000 to 6,000 units per week when he raised the price of the product from $200 to $250. What is Jim’s own price elasticity of demand?

1.29

1.00

0.25

0.78

22Use the table provided to answer the following question. What is the marginal revenue from producing the fourth unit?

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Enlarged View

90

50

0

180

23A manager invests $20,000 in equipment that would help the company reduce it’s per unit costs from $15 to $12. He expects the equipment to be in use for the next seven years. After two years, he realizes that if he outsourced the production, the unit cost would be $7 instead. At this point what should the senior manager do?

Charge the manager for the next five years of depreciation

Write off the equipment as sunk cost and allow for outsourcing since it is cheaper

Not allow for outsourcing since the equipment is good for another five years.

None of the above

24The government decided to reduce taxes on fast-food to increase tax revenue. The government assumes that fast-food products have:

An inelastic demand

An elastic demand

A demand curve that is upward sloping

A unitary elastic demand curve

25Which of the following factors would shift the supply curve for ice cream to the right?

A new cooling technology emerges.

The price per unit increases.

The number of producers in the market for ice cream increase.

Both A and C

26A firm sells 1,000 units per week. It charges $15 per unit, the average variable costs are $10, and the average fixed costs are $25. In the long run, the firm should:

Shut down, as the firm is making a loss of $10,000 per week.

Shut down, as price is lower than average total cost.

Continue operating, as the firm is covering all the variable costs and some of the fixed costs.

Shut down, as it is cost effective to pay off the remaining fixed costs.

27Use the table provided to answer the following question. If the firm hires five workers, the average cost equals:

ECN-601-Image 7.JPG

Enlarged View

$80

$1,000

Need more information

$10

28Price ceilings cause:

Some suppliers to drop out of the market

A decrease in the total production in the market

The creation of black markets

All the above

29A buyer values a house at $525,000 and a seller values the same house at $485,000. If sales tax is 8% and is levied on the seller, then what would be the lowest price at which the seller would be willing to sell?

$527,000

$523,800

$525,00

$500,000

30In general, the smaller the price elasticity:

The smaller the responsiveness of price to changes in quantity.

The smaller the responsiveness of quantity to changes in price.

The larger the responsiveness of price to changes in quantity.

The larger the responsiveness of quantity to changes in price.

ECN601 Economics

Week 7 Exam 2

Which of the following would not be illegal according to the Robinson-Patman Act?

“Party Packers” getting 10 cents off every pack of ribbon they buy after 1000 units

“Fred’s Farms” offering 50 cents off a crate of strawberries to retailers to match other suppliers with similar rates.

“Sam’s Sandwiches” receiving 5 cents off per pound of cheese

All of the above

2 The optimal strategy in a Vickery auction is to:

Bid aggressively.

Bid above your value since you would be paying the second highest price.

Bid exactly your value.

Bid below your value.

3 In a principal-agent relationship

The principal wants the agent to act on her own behalf.

The agent wants the principal to act on his behalf.

The principal wants the agent to act on the behalf of others.

The agent wants the principal to act on the behalf of others.

4 Compared to simple pricing, price discrimination leads to:

Loss in profits.

Increased revenue.

Consumer surplus being converted to producer surplus.

Both B and C.

5 The pricing rule MR=MC holds for:

All firms

Single product firms

Multiple product firms

None of the above

6 Which of the following is a violation of antitrust laws?

A firm discussing/fixing price with its competitors.

Making arrangements to stay out each other’s markets.

Merging with the competitor to eliminate competition.

All of the above

7 Nash equilibrium is:

Where one player maximizes payoff and the other does not.

When one player’s strategy is the best response to the other player’s strategy.

Where the outcome is always efficient.

Difficult to determine.

8 What is it called when each additional worker hired contributes successively smaller amounts of output?

Diminishing profitability

Diminishing total product

Diminishing marginal product

None of the above

9 If the VP of a product launch thinks that a particular product would be profitable, but ended up launching an unprofitable product, this will be a:

Type I error

Type II error

Neither Type I nor Type II error

False positive

10 You experiment by offering free warranties for your product in market A but not in market B. Sales in Market A rise from 240 to 360 units per week while sales in Market B rise from 410 to 430. The difference-in-difference estimate of the effect of the free warranty is:

80 units

100 units

120 units

140 units

11 Indirect price discrimination differs from direct price discrimination because:

In indirect price discrimination, high value consumers can sometimes still get the low price

In direct price discrimination, firms do not have to worry about cannibalizing.

Direct price discrimination encourages rivals to enter but indirect discrimination does not.

There is no difference between the two.

12 For jointly owned substitute products, cannibalization leads to MR______MC.

Higher than

Lower than

Equals

None of the above

13 Half of all your potential customers would pay $10 for your product, but the other half would only pay $8. You cannot tell them apart. Your marginal costs are $4. If you set the price at $8, the expected profit is:

$3

$4

$5

$6

14 For direct price discrimination to work effectively

The low-valued customers should not be able to engage in arbitrage.

You need to charge the same price to the different groups.

Both groups should have the same elasticity of demand.

None of the above

15 For a production function with a diminishing, but positive, marginal product of labor:

Output increases at an increasing rate as more workers are employed

Output increases at a decreasing rate as more workers are employed.

Output declines as more workers are employed.

The effects on marginal product are unknown.

16 Which of the following is true?

Incentive compensation imposes no risks on the agents and thus should not affect their compensation.

Incentive compensation imposes risk on the agent but need not be compensated for.

Incentive compensation imposes risk on the agent for which the agent should be compensated

Incentive compensation is a bad idea

17 Jim has a better chance of having his offer accepted, since the seller does not have any outside offers.

Jim has a better chance of having his offer accepted, since the seller does not have any outside offers.

Jim has lower chances of having his offer accepted, since the seller has more outside offers.

The disagreement value for the seller has increased

Only A and C

18 The general rule to increase profits when two close complementary brands are jointly owned is:

Increase prices for both brands.

Decrease prices for both brands.

Increase prices on one brand, and decrease prices it for the other.

Increase prices on one brand, but keeping the prices of the second brand constant.

19 Which of the following is a screen against adverse selection?

Insurance companies require homeowners to have smoke detectors

Rearview cameras in cars.

Installing engine monitors to track driving habits of the insured.

Prospective secretaries must take a typing test before being hired.

20 Use the table provided to answer the following question. If the groups are of equal size and the firm can only set one price, how should the firm price the high-end wok?

Price low and sell to both groups.

Price high and sell only to the professional chefs.

Price low and sell only to the home users.

All of the above

21 An HVAC company is selling heating and cooling equipment. It has separate sales and marketing units. The marketing unit would want to:

Price aggressively to ensure sales are made.

Price less aggressively to ensure that profitable sales are made.

Price at cost to maximize sales.

None of the above

22 Moral hazard implies that:

Insured individuals exercise less care because they have less incentive to do so.

Insured individuals exercise more care because they have less incentive to do so.

Insured individuals exercise more care because they have more incentive to do so.

Insured individuals exercise less care because they have more incentive to do so.

23 Which of the following is not an example of risk aversion?

You lock your garage when you have expensive workshop tools.

You are more careful when you buy a more expensive car.

Individuals tend to gamble more with their money when the future is uncertain.

You only go swimming when the lifeguard is on duty.

24 The tradeoff between ____ and _____ is represented as the labor supply curve.

Work and wages

Work and leisure

Wages and productivity

Technology and wages

25 Viceroy Vacations is deciding on how to price its vacation packages. Which of the following strategies would you suggest?

Price the flight, hotel, and car separately.

Advertise them as an all-inclusive vacations.

Give them away as free vacations to everyone.

Close down your company. No one goes on vacations anymore.

26 Use the table provided to answer the following question. If the firm decides to only offer the high-end wok, what is the highest price it can charge the chefs?

$70

$80

$90

$100

27 In a two-person repeated game, a tit-for-tat strategy is:

When each player pursues his or her own self-interest without any cooperation.

When players start off as noncooperative and then cooperate when one or both players show interest in colluding.

When players start by cooperating and then mimic the other player’s last move.

When neither player defects.

28 Three possibilities are equally likely and have payoffs of $6, $12, and $24. The expected value is:

$4

$14

$6

$7

29 Tom wants to avoid any accidents on the work floor of his factory. If an accident does occur, it would cost him $500,000 in damages. Installing safety equipment would decrease the probability of an accident occurring from 20% to 10%. However, the equipment costs $20,000 to install. Would Tom install the safety equipment?

Yes, because it costs him less than it is worth.

Yes, because it costs him more than it is worth.

No, because it costs him more than it is worth.

No, because it costs him less than it is worth.

30 Tom wants to avoid any accidents on the work floor of his factory. If an accident does occur, it would cost him $500,000 in damages. Installing safety equipment would decrease the probability of an accident occurring from 20% to 10%. However, the equipment costs $20,000 to install. What is his expected loss after installing the safety equipment?

$20,000

$50,000

$100,000

$125,000