Professional Documents
Culture Documents
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Week 1
Problem 1:
Assuming the opportunity interest rate is 8%, what is the present value
of the second alternative mentioned above? Which of the two
alternatives should be chosen and why?
Problem 2:
Year 0
Year 1 Probability .2 Cash flow $50 million, Probability .3 Cash flow $40
million,Probability .4 Cash flow $30 million,Probability .1 Cash flow $20
million
Year 2 Probability .1 Cash flow $60 million, Probability .2 Cash flow $50
million,Probability .3 Cash flow $40 million,Probability .4 Cash flow $30
million
Year 3 Probability .3 Cash flow $70 million, Probability .4 Cash flow $60
million,Probability .1 Cash flow $50 million,Probability .2 Cash flow $40
million
Describe your answer for each question in complete sentences,
whenever it is necessary. Show all of your calculations and processes
for the following points:
Problem 1:
Patricia is researching venues for a restaurant business. She is
evaluating three
area of Los Angeles, then taste is the most important attribute, three
times as
both of which are priced the same. She has rated each attribute on a
scale of 1 to
Attribute
Taste
Location
Price
Show all of your calculations and processes. Describe your answer for
each
a. Which of the two options should Patricia pursue if she wants to open
a
utility from each restaurant option and compare. Graph is not required.
b. Which of the two options should she pick if she plans to open a
restaurant
in the Los Angeles metropolitan area? Describe your answer, and show
your calculations.
calculations.
d. Provide a description of a scenario in which this kind of decision
between
Problem 2:
Show all of your calculations and processes. Describe your answer for
each
should they reduce the price and thereafter, sell more donuts
(assuming
Reference:
Education
hires local drivers paid fixed salaries monthly, regardless of the number
of trips or tons of cargo
that each driver transports each month. The below table presents
details about the number of
Drivers employed
Which inputs are fixed and which are variable in the production
function of Jennifer
weather and then return to their main homes in mid-spring. Given this
seasonality, Palms tries to
keep the overhead costs as low as possible and therefore, often uses
seasonal contracted labor to
man its operations. The following table shows the labor costs in each
month of operation over the
past 12 months as well as the total number of garments that were dry-
cleaned in each month.
Palms pays fixed wages per hour to each employee, and we can assume
that the costs of other
Month
June
July
August
September
October
TVC ($)
a. Derive average variable cost (AVC) data from the data in this table.
represent the MC curve over this range of outputs. Plot these data
points and sketch in
estimated MC and AVC curves that seem to best fit these data points.
units to 4,000 units next month (June). What is the incremental cost of
meeting this
demand?
d. Assuming that Palms price to dry clean a garment has been constant
at $15 over the
past year, and will remain at that level, what contribution to overheads
and profit can
it expect in June?
2. 3. Over the past 12 months the Four Winds Novelty Company firm
has recorded its internet sales
(equals monthly output levels) and its monthly total variable costs
(TVC) for a particular novelty
item as shown in the following table. Sales have grown over this period
with relatively few
Sales = Output
TVC ($)
102,813
a.
Using regression analysis, find an equation that best fits the data to
represent the
TVC function.
b. At what sales/output level will marginal costs (MC) reach a
minimum?
c. Estimate the value of TVC for sales/output level 250,000 units, and
calculate the
Problem 1:
Show all of your calculations and processes. Describe your answer for
each question in
equilibrium point.
b. How much economic profit do you expect that Roberts company will
make in the
first year?
why not?
Problem 2:
Greener Grass Company (GGC) competes with its main rival, Better
Lawns and Gardens
western suburbs of a major east-coast city. Last year, GGCs price for
the typical lawn
system was $1,900 compared with BLGs price of $2,100. GGC installed
9,960 systems, or
about 60% of total sales and BLG installed the rest. (No doubt many
additional systems
hardware stores.)
has all the necessary equipment and can easily hire and train installers.
Accordingly, GGC
In past years, both GGC and BLG have installed several hundred
systems in the eastern
suburbs but generally their sales efforts are met with the response that
the systems are too
expensive. GGC has hired you to recommend a pricing strategy for both
the western and
eastern suburb markets for this coming season. You have estimated
two distinct demand
functions, as follows:
for the eastern market, where Q refers to the number of units sold; P
refers to price level; A
suburbs. GGC does not expect BLG to change its price from last year
because it has
already distributed its glossy brochures (with the $2,100 price stated) in
both suburbs, and
its TV commercial has already been produced. GGCs cost structure has
been estimated as
b. Derive GGCs marginal revenue (MR) and marginal cost (MC) curves
in each
market. Show graphically GGCs demand, MR, and MC curves for each
market.
Reference:
0 95.9
10 84.8
15 65.4
20 41.3
25 15.7
30 3.0
35 0
A. Why would your company have bid with a zero mark-up on some
past tenders? Why didnt it win all of those contracts?
Describe the company and provide a brief history of its operations. Find
or use graphs to illustrate its financial performance over the years.
Describe the inputs that are used in this companys production function
and identify any challenges to securing these inputs.
Evaluate if the company made any mistakes in its decisions over time,
and recommend any changes or improvements for the future
operations. Refer to the financial reports when making specific
observations or recommendations.
Use economic language and demonstrate your understanding of the
concepts and theories of this course.
a. Title of paper
b. Students name
d. Instructors name
e. Date submitted
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BUS 640 Week 1 DQ 1 Firm Objectives
BUS 640 Week 5 Price Quotes and Pricing Decisions Applied Problems
(New)
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Firm Objectives. Why do some business firms pursue a triple-bottom-
line outcome while others focus only on profit maximization? Please,
use a real company example to illustrate your points
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Decision Making Under Uncertainty. To save on gasoline expenses,
Edith and Mathew agreed to carpool together for traveling to and from
work. Edith preferred to travel on I-20 highway as it was usually the
fastest, taking 25 minutes in the absence of traffic delays. Mathew
pointed out that traffic jams on the highway can lead to long delays
making the trip 45 minutes. He preferred to travel along Shea
Boulevard, which was longer (35 minutes), but rarely had traffic jams.
Edith agreed that in case of traffic jams, Shea Boulevard was a
reasonable alternative. Neither of them knows the state of the highway
ahead of time.
After driving to work on the I-20 highway for 1 month (20 workdays),
they found the highway to be jammed 3 times. Assuming that this
month is a good representation of all months ahead, should Edith and
Mathew continue to use the highway for traveling to work?
How would you conclusion change for the winter months, if bad
weather makes it likely for traffic jams on the highway to increase to 6
days per month?
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BUS640 week 1 Assignment Problem 1: A generous university
benefactor has agreed to donate a large amount of money for student
scholarships. The money can be provided in one lump sum of $12
million in Year 0 (the current year), or in parts, in which $7 million can
be provided at the end of Year 1, and another $7 million can be
provided at the end of Year 2. Describe your answer for each item
below in complete sentences, whenever it is necessary. Show all of
your calculations and processes for the following points: Assuming the
opportunity interest rate is 8%, what is the present value of the second
alternative mentioned above? Which of the two alternatives should be
chosen and why? How would your decision change if the opportunity
interest rate is 12%? Provide a description of a scenario where this kind
of decision between two types of payment streams applies in the real-
world business setting. Problem 2: The San Diego LLC is considering a
three-year project, Project A, involving an initial investment of $80
million and the following cash inflows and probabilities: Year 0 Initial
Investment $80 million discount rate 8% Year 1 Probability .2 Cash flow
$50 million, Probability .3 Cash flow $40 million,Probability .4 Cash flow
$30 million,Probability .1 Cash flow $20 million Year 2 Probability .1
Cash flow $60 million, Probability .2 Cash flow $50 million,Probability .3
Cash flow $40 million,Probability .4 Cash flow $30 million Year 3
Probability .3 Cash flow $70 million, Probability .4 Cash flow $60
million,Probability .1 Cash flow $50 million,Probability .2 Cash flow $40
million Describe your answer for each question in complete sentences,
whenever it is necessary. Show all of your calculations and processes
for the following points: Describe and calculate Project As expected net
present value (ENPV) and standard deviation (SD), assuming the
discount rate (or risk-free interest rate) to be 8%. What is the decision
rule in terms of ENPV? What will be San Diego LLCs decision regarding
this project? Describe your answer. The company is also considering
another three-year project, Project B, which has an ENPV of $32 million
and standard deviation of $10.5 million. Project A and B are mutually
exclusive. Which of the two projects would you prefer if you do not
consider the risk factor? Explain. Describe the coefficient of variation
(CV) and the standard deviation (SD) in connection with risk attitudes
and decision making. If you now also consider your risk-aversion
attitude, as the CEO of the San Diego LLC will you make a different
decision between Project A and Project B? Why or why not?
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Week 2 Assignment Consumer Demand Analysis and Estimation Applied
Problems Please complete the following two applied problems:
Problem 1: Patricia is researching venues for a restaurant business. She
is evaluating three major attributes that she considers important in her
choice: taste, location, and price. The value she places on each
attribute, however, differs according to what type of restaurant she is
going to start. If she opens a restaurant in a suburban area of Los
Angeles, then taste is the most important attribute, three times as
important as location, and two times as important as price. If she opens
a restaurant in the Los Angeles metropolitan area, then location
becomes three times as important as taste and two times as important
as price. She is considering two venues, respectively, a steak restaurant
and a pizza restaurant, both of which are priced the same. She has
rated each attribute on a scale of 1 to 100 for each of the two different
types of restaurants. Attribute Steak Restaurant Pizza Restaurant Taste
80 70 Location 55 80 Price 65 50 Show all of your calculations and
processes. Describe your answer for each question in complete
sentences. Which of the two options should Patricia pursue if she wants
to open a restaurant in a suburban area of Los Angeles? Calculate the
total expected utility from each restaurant option and compare. Graph
is not required. Describe your answer, and show your calculations.
Which of the two options should she pick if she plans to open a
restaurant in the Los Angeles metropolitan area? Describe your answer,
and show your calculations. Which option should she pursue if the
probability of finding a restaurant venue in a suburban area can be
reliably estimated as 0.7 and in a metropolitan area as 0.3? Describe
your reasoning and show your calculations. Provide a description of a
scenario in which this kind of decision between two choices, based on
weighing their underlying attributes, applies in the real-world
business setting. Furthermore, what are the benefits and drawbacks, if
any, to this method of decision making? Problem 2: The demand
function for Newtons Donuts has been estimated as follows: Qx = -14
54Px + 45Py + 0.62Ax where Qx represents thousands of donuts; Px is
the price per donut; Py is the average price per donut of other brands
of donuts; and Ax represents thousands of dollars spent on advertising
Newtons Donuts. The current values of the independent variables are
Ax=120, Px=0.95, and Py=0.64. Show all of your calculations and
processes. Describe your answer for each question in complete
sentences, whenever it is necessary. Calculate the price elasticity of
demand for Newtons Donuts and describe what it means. Describe
your answer and show your calculations. Derive an expression for the
inverse demand curve for Newtons Donuts. Describe your answer and
show your calculations. If the cost of producing Newtons Donuts is
constant at $0.15 per donut, should they reduce the price and
thereafter, sell more donuts (assuming profit maximization is the
companys goal)? Should Newtons Donuts spend more on advertising?
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BUS 640 Week 2 DQ 1 Marginal Rate of Substitution
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BUS 640 Week 2 DQ 2 Demand Elasticity
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Demand Elasticity. Please, read the article Hainer, R. (2010), provided in
the required readings section for this week. The tobacco industry is a
prime example to consider when talking about price elasticity of
demand. While nicotine use can be addictive for many users, it is not
addictive for the so-called "social smokers".
What can we say about the price elasticity of demand for nicotine
products (such as cigarettes, pipes, tobacco) in the group of nicotine
addicted users, versus the group of "social smokers"? Can we say
whose demand is likely to be more elastic? Why?
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Relevant Costs. Two partners own together a small landscaping
business in North Carolina, called Summer Lawn Care. They have been
specializing in summer grass seeding, installation, and maintenance.
Recently, the partners acquired special technology and know-how for
winter grass installations and maintenance. They also added a tree
cutting service as recent storms in the area had caused demand for this
service to soar. One of the partners insists that the name of the
business should change to Lawn and Tree Care, so that it better reflects
the range of services and, thus, generates more customer interest, and
thus contracts. The second partner wants to keep the old name and
argues, We have already paid for business cards, vehicle paint,
signage, and ads in Yellow Pages. Evaluate the arguments of the two
partners. Explain and illustrate their points by identifying the relevant
and irrelevant costs for this decision.
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Contribution Analysis. Explain what is meant by contribution analysis.
Carefully define the term and provide examples to illustrate it.
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Problem 1:
Workers employed
75
180
3
360
600
900
1140
1260
1360
Show all of your calculations and processes. Describe your answer for
each question in complete sentences, whenever it is necessary.
Which inputs are fixed and which are variable in the production
function of Williams pizza shop? Over what ranges do there appear to
be increasing, constant, and/or diminishing returns to the number of
workers employed?
What number of workers appears to be most efficient in terms of pizza
product per worker?
Why would marginal productivity decline when you hire more workers
in the short run after a certain level?
Problem 2:
The Paradise Shoes Company has estimated its weekly TVC function
from data collected over the past several months, as TVC = 3450 + 20Q
+ 0.008Q2 where TVC represents the total variable cost and Q
represents pairs of shoes produced per week. And its demand equation
is Q = 4100 25P. The company is currently producing 1,000 pairs of
shoes weekly and is considering expanding its output to 1,200 pairs of
shoes weekly. To do this, it will have to lease another shoe-making
machine ($2,000 per week fixed payment until the lease period ends).
Show all of your calculations and processes. Describe your answer for
each item below in complete sentences, whenever it is necessary.
Describe and derive an expression for the marginal cost (MC) curve.
Describe and estimate the incremental costs of the extra 200 pairs per
week (from 1,000 pairs to 1,200 pairs of shoes).
What are the profit-maximizing price and output levels for Paradise
Shoes? Describe and calculate the profit-maximizing price and output.
Discuss whether or not Paradise Shoes should expand its output further
beyond 1,200 pairs per week. State all assumptions and qualifications
that underlie your recommendation.
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Strategic Behavior Oligopolies. An interesting example of strategic
behavior comes from a 1997 article about Microsofts investment in
Apple (New Straits Times, 1997). The article is included in the Required
Readings list. Facing tough anti-trust scrutiny from government
agencies, Microsoft provided financial support to Apple in order to
ensure Apples survival and, therefore, to ensure that competitiveness
in the industry remains. Moreover, the partnership with Apple provided
an additional market for Microsofts products the MS Office and the
IE products were to be bundled with the MAC OS as one of the
conditions for this financing. Discuss this case in the context of market
structure and strategic behavior. What market structure do these firms
operate in? Why did Microsoft need to preserve competitiveness in the
industry? What was Microsoft afraid of in the event that Apple did not
survive?
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Local Market Power. Bulls Eye department store specializes in the sales
of discounted clothing, shoes, household items, etc. similar to the
offerings at a regular Walmart or Target. Bulls Eye is the only
department store in Show Low and the nearest other discount retailer
is Target, located 49 miles away in Eagar. Bulls Eye, therefore, has some
market power in its local area. Despite having some market power,
Bulls Eye is currently suffering losses. An analyst at Bulls Eye is
recommending to the manager to raise prices, so that profitability can
be improved. The manager is unsure of this strategy as recent data
points to increasing numbers of individuals shopping more and more.
What are the pros and cons of raising the prices at Bulls Eye and would
that strategy be profitable?
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BUS 640 Week 4 Journal Economics in News
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BUS 640 Week 4 Journal Economics in News
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Market Structures and Pricing Decisions Applied Problems.
Problem 1:
Show all of your calculations and processes. Describe your answer for
each question in
a. What are the profit-maximizing price and output levels? Explain them
and calculate
equilibrium point.
b. How much economic profit do you expect that Roberts company will
make in the
first year?
why not?
Problem 2:
Greener Grass Company (GGC) competes with its main rival, Better
Lawns and Gardens
western suburbs of a major east-coast city. Last year, GGCs price for
the typical lawn
system was $1,900 compared with BLGs price of $2,100. GGC installed
9,960 systems, or
about 60% of total sales and BLG installed the rest. (No doubt many
additional systems
hardware stores.)
has all the necessary equipment and can easily hire and train installers.
Accordingly, GGC
In past years, both GGC and BLG have installed several hundred
systems in the eastern
suburbs but generally their sales efforts are met with the response that
the systems are too
expensive. GGC has hired you to recommend a pricing strategy for both
the western and
eastern suburb markets for this coming season. You have estimated
two distinct demand
functions, as follows:
for the eastern market, where Q refers to the number of units sold; P
refers to price level; A
suburbs. GGC does not expect BLG to change its price from last year
because it has
already distributed its glossy brochures (with the $2,100 price stated) in
both suburbs, and
its TV commercial has already been produced. GGCs cost structure has
been estimated as
Show all of your calculations and processes. Describe your answer for
each item below in
b. Derive GGCs marginal revenue (MR) and marginal cost (MC) curves
in each
market. Show graphically GGCs demand, MR, and MC curves for each
market.
Reference:.
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Good Will in Price Bidding. Sometimes, a bidder on a work contract may
bid lower than what would maximize his/her profit from the contract
and the reason for that is to create goodwill (to increase expected
future business from the buyer). How would you value the goodwill
that is obtained in this way?
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New Product Introduction. Bayer Schering Pharma AG, Germany owns
the Alka-Seltzer, which was launched in 1931 and was meant for relief
of minor aches, pains, inflammation, fever, headache, heartburn, sour
stomach, indigestion, and hangovers. The Alka-Seltzer Plus was a spin-
off of the original medicine, meant to relieve colds and flu.
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Week 5 Assignment
Problem 1:
Jessica Alba, a famous actress, starts the baby and family products
business, The Honest Company, with Christopher Gavigan. Alba and
Gavigan set up their site so families can choose what kinds of non-toxic,
all-natural products they'd like to use and get them in a bundle.
Families can choose all kinds of products from food to hygiene
necessities and cleaning supplies. Suppose they are thinking of
expanding their business into five domestic markets: Phoenix, Dallas,
Chicago, New York, and Atlanta. Assume their primary goal of business
is to maximize economic profits, although they want to do business
honestly.
Show all your calculations and process. Describe your answer for each
question in three- to five-complete sentences.
You are a business adviser for Alba and Gavigan. Describe a skimming
price and a penetration price, and advise them whether they should
charge a skimming price or a penetration price, with supportive
reasoning for and against each pricing alternative.
Are they likely to make economic profits initially? Can they continue to
make economic profits in the long term? Why or why not? Discuss.
What advice would you give to Alba and Gavigan to help them make
more profit in the long term?
Problem 2:
You operate your own small building company and have decided to bid
on a government contract to build a pedestrian walkway in a national
park during the coming winter. The walkway is to be of standard
government design and should involve no unexpected costs. Your
present capacity utilization rate is moderate and allows sufficient scope
to understand this contract, if you win it. You calculate your
incremental costs to be $268,000 and your fully allocated costs to be
$440,000. Your usual practice is to add between 60% and 80% to your
incremental costs, depending on capacity utilization rate and other
factors. You expect three other firms to also bid on this contract, and
you have assembled the following competitor intelligence about those
companies.
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Game Theory and Strategic Behavior. Suppose that GE is trying to
prevent Maytag from entering the market for high efficiency clothes
dryers. Even though high efficiency dryers are more costly to produce,
they are also more profitable as they command sufficiently higher
prices from consumers. The following payoffs table shows the annual
profits for GE and Maytag for the advertising spending and entry
decisions that they are facing.
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Sustainable Competitive Advantage. Describe the circumstances under
which a firm chooses a low-cost strategy to attain sustainable
competitive advantage. What about the situations when a
differentiation strategy is chosen? Provide specific real world examples.
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We have another set of final paper based on walmart which could be
found on this link
Focus of the Final Paper
Describe the company and provide a brief history of its operations. Find
or use graphs to illustrate its financial performance over the years.
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We have another set of Final Paper based on Apple company, it could
be found on this link
Describe the company and provide a brief history of its operations. Find
or use graphs to illustrate its financial performance over the years.
Identify any sources of risk or uncertainty in its operations. Do the
financial reports indicate risky or uncertain activities or changes to the
economic environment that ultimately appear to have affected the
companys financial outcomes? Be specific.
Describe the inputs that are used in this companys production function
and identify any challenges to securing these inputs.
a. Title of paper
b. Students name
d. Instructors name
e. Date submitted