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Analytical Questions for DISCUSSION Economics and Management

1) For each of the following changes, state what will happen to market equilibrium price and quantity in the short run.
(Use the demand curve)
a. Consumers expect that the price of the good will be higher in the future.
b. The price of a substitute good rises.
c. Consumer incomes fall, and the good is normal.
d. Consumer incomes fall, and the good is inferior.
e. A medical report is published showing that this product is hazardous to your health.
f. The price of the product rises.

2) For each of the following changes, state what will happen to market equilibrium price and quantity in the short run.
(Use the supply curve)
a. The government requires pollution control filters that raise production costs.
b. Wages of workers in this industry fall.
c. There is an improvement in technology.
d. The price of the product falls.
e. Producers expect that the price of the product will fall in the future.

3) Demand is given by: QD = 6000 - 50P, Domestic supply is: QS = 25P, and Foreign producers can supply any quantity at a price of $40.
a. If foreign producers can sell in the domestic market, what is the equilibrium price? What is the equilibrium quantity? How much is sold by domestic and foreign producers, respectively?
b. Under domestic government pressure, foreign producers voluntarily agree to restrict their goods. What will happen to the price and quantity? What will happen to the amount that domestic producers supply? What will happen to revenues of domestic and foreign producers?

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Analytical Questions for DISCUSSION Economics and Management
1) For each of the following changes, state what will happen to market equilibrium price and quantity in the short run.
(Use the demand curve)
a. Consumers expect that the price of the good will be higher in the future.

Solution:
When consumers expect that the price of the good will increase in the future, they will demand more goods now. So, the demand curve will shift to the right resulting in an increase in the market equilibrium price & increase in quantity in the short run. This is shown in the following graph.

In the above figure, D & S denotes the original demand & supply curves. P & Q are the market equilibrium price & quantity. Due to the consumers expectation about the future increase in price, the demand curve is shifted to D* which leads to an increase in the market equilibrium price & quantity as P* & Q*.

b. The price of a substitute good rises.

Solution:

If the price of a substitute good rises, then the demand for the good will increase & the demand curve will shift to the right. This results in higher market equilibrium price & quantity in the short run.

In the above figure, due to the increase in the price of the substitute good, the demand is increased & shifted to D*. Thus, a rightward shift in the demand curve leads to higher market equilibrium price (P*) & quantity (Q*).

c. Consumer incomes fall, and the good is normal.

Solution:

A fall in the consumer income leads to a decrease in the demand for normal good & the demand curve will shift to the left. This results in lower market equilibrium price & quantity. This impact is shown in the following figure.

Due to the decline in consumers income, the demand curve is shifted to the left as D* resulting in a decline in the market equilibrium price & quantity as ...

Solution Summary

This solution discusses three different economics and management problems.

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Strategies of Human Resource Management: three problems

1. Ten years ago Albert Phillips opened his own retail store and sold unpainted furniture. His store was located in Lakeside, a small city in the southeastern part of the United States. Although his business was somewhat slow first, it grew steadily.

Many more sales, stock, and clerical personnel were hired. However, it soon became evident that Mr. Phillips was not able to effectively service all potential customers. Warehouse space was also badly needed.

Phillips Furniture Store was situated in a central location, and Mr. Phillips was hesitant about relocating. As an alternative to relocating, Mr. Phillips opened a satellite store in an outlying district to attract a new source of customers, as well as to provide better service to his current customers. Mr. Phillip eventually expanded his business into several neighboring towns until he had a total of six stores. When Martin Furniture, a small manufacturing firm that supplied some of the furniture for Phillips, became financially unstable, Mr. Phillips was able to gain control of the manufacturing plant.

At the end of last week, you were called into Mr. Phillips' office, and Mr. Phillips said, to you, 'I have been pleased with your progress with us as a management trainee since you graduated six months ago.' He explained that he felt that the company had gotten large enough to need a personnel manager. Previously, all managers handled most of their own personnel activities, usually on a 'casual' basis. Mr. Phillips told you that with the acquisition of the manufacturing firm, 'It's time for us to get our personnel activities organized, and you're the person to do it.'

When asked why, he said, 'I reviewed your personal file and noticed you had some courses in human resource management listed on your transcript.' Also you have good people skills. Faced with both the challenge and the promotion, you accepted. Now you are trying to decide, 'What am I to do now that I'm the HR manager?'

1. On what activities would you tell Mr. Phillips you intend to focus? Why?

2. What would be your first action? Why?

3. What elements might be part of your strategic HR plan?

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Boomtown sits in the middle of a huge, newly developed coal field and a great deal of oil and gas exploration is going on as well. Boomtown has grown from 30,000 to 60,000 in three years and the unemployment rate in town is less than 3%. Those not working simply would rather not.

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2. What approaches could be used to recruit mechanics?

7. According to a recent article in HR Magazine (Statistically Speaking - HR Mag June 2007.pdf), HR departments most frequently use indicators as a:

Part of a modeling exercise to assess the potential impact of a strategic decision.

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Where do you find some of the data? Review the attached article. Pick one of the situations above an offer some data sources to help management forecast or evaluate their decision options. You might consider such elegant places as the Census Bureau, Department of Labor, Department of Commerce, Bureau of Labor Statistics, Bureau of Economic Analysis. Also your Wayland Library has many article and database search capabilities - see "Web Resources" for information on the Library's EZProxy capability

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