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Managerial Economics

Description of The Perfectly Competitive Model

Respond to the following: a. A colleague says to you: "The perfectly competitive model is not very useful for managers because very few markets in the U.S. economy are perfectly competitive." i. Do you agree with this statement? Explain. ii. Regardless of whether you agree or not, what lessons can managers learn by stud

Proposal to cap the compensation of fund managers at $100,000

The Manager of your company's pension fund is compensated based entirely on fund performance; he earned over $1.2 million last year. As a result, the fund is contemplating a proposal to cap the compensation of fund managers at $100,000. Provide an argument against the proposal.

Exemplify profit motive.

Explain with one example how the profit motive helps firms to make efficient managerial decisions. Identify the managerial problem, the rule to maximize profit, and apply that rule to the concrete situation.

Cross-culturual communication

MNCs have business units in different geographic areas. This leads to interaction between different languages and cultures. People from different cultures not only speak different languages, but also interpret information in different ways. At your workplace, how will you ensure effective cross-cultural management? What guideli

Hiring a new worker and diminishing returns

At a management luncheon, two managers were overheard arguing about the following statement: "A manager should never hire another worker if the new person causes diminishing returns." Is this statement correct? If so, why? If not, explain why not.

Units if output

Ann McCutcheon is hired as a consultant to a firm producing ball bearings. This firm sells in two distinct markets, each of which is completely sealed off from the other. The demand curve for the firm's output in the first market is P1 =160 - 8Q1, where P1 is the price of the product and Q1 is the amount sold in the first market

PepsiCo strategies

Coca-Cola and PepsiCo are the leading competitors in the market for cola products. In 1960 Coca-Cola introduced Sprite, which today is the worldwide leader in the lemon-lime soft drink market and ranks fourth among all soft drinks worldwide. Prior to 1999, PepsiCo did not have a product that competed directly against Sprite and

current pricing decisions

Price comparison services on the Internet (as well as "shop bots") are a popular way for retailers to advertise their products and a convenient way for consumers to simultaneously obtain price quotes from several firms setting I identical product. Suppose that you are the manager of Digital Camera, Inc., firm that specializes in

A. Explain why the change from a system of fixed wages to one of base wage plus commission can lead to an increase in sales revenue. B. Explain how the introduction of comparative evaluation can reduce the firm's cost of compensating its sales force. Which alternative would you favor? Why?

American Linen is a firm that has multiple salespersons. In 2008, it changed the compensation method for its sales force, moving from a system of fixed wages to one of base wage plus commission. As a result, American Linen's total revenue from sales increased by almost 30%, and the average compensation received by a salesperson

Managerial Economics Discussion

Given most common goods, will a new specific tax on the purchase and use of the good increase or decrease its equilibrium quantity? Will consumers benefit or lose? Will producers of the product benefit or lose?

Is this example an economically efficient move?

Business Week, in an article dealing with management, wrote, "When he took over the furniture factory three years ago...[the manager] realized almost immediately that it was throwing away at least $100,000 a year worth of wood scrap. Within a few weeks, he set up a task force of managers to deal with the problem. And within a fe

Market structure that a business operates in

What market structure does the firm you work for, or a firm in which you are familiar operate in? Why did you arrive at this decision, and how does this affect the approach these firms use to compete?

Advanced Topics in Business Strategy -- Barriers to Entry and Limit Pricing

Suppose that, prior to other firms entering the market, the maker of a new smartphone (Way Cool, Inc.) earns $100 million per year. By reducing its price by 50 percent, Way Cool could discourage entry into â??itsâ? market, but doing so would cause its profits to sink to -$5 million. By pricing such that other firms would be


Financial ratio analysis is conducted by managers, equity investors, long term creditors, and short-term creditors. What is the primary emphasis of each of these groups in evaluating ratio?

Estimate Sales and Using Advertising

I need help figuring out the steps I need to take to answer this problem: David Ding advertises on a local radio station. For the past six weeks, the manager has kept records of the number of minutes of advertising that were purchased, and the sales for that week. Week 1, 2 minutes of advertising with $1.400 in sales. Week 2,

Unit 2 - Racial Issues & Discrimination

Deliverable Length: 150-250 words As the manager of human resources (HR) in a medium-size company that is involved with several Affirmative Action initiatives, you have noticed that the racial makeup of your workforce has an increasing number of multiracial employees (or workers who are offspring of a biracial couple). You a

Beta, and rate of return

ABC Company is a holding company with three subsidiaries. The following data pertains to these subsidiaries: Subsidiary Business percentage Beta A 50 .8 B 30 1.1 C 20

Business economics

7) Use figure 2 below to answer to the following question: Indicate where the economy is located if aggregate output is above the level of planned spending and if aggregate output is above the equilibrium level of output.

Professor Salaries

At many colleges and universities, business professors receive higher salaries than professors in others fields. Why might this be the case? Use the Internet and the readings to answer this question and provide examples.

time weighted avg rate of return.

Need help with following problem: A portfolio manager is being evaluated based on the time-weighted average rate of return. If the manager had achieved annual returns for the past three years of 2.5%, 14.5% and 9% on one initial investment of $500,000, what is the time weighted rate of return on the portfolio. (Round to nea

What are your firm's profits

I'd like some help with this problem to make sure I'm heading in the right direction. This is from Baye 6th edition. You are the manager of a firm that produces products X and Y at zero cost. You know that different types of consumers value your two products differently, but you are unable to identify these consumers individua

Payback period for a project.

The payback period for a project, requiring an initial outlay of $10,000 and producing ten uniform annual cash inflows of $1,500, is six years. six years and eight months. six years and six months seven years.

Compute: Payback period, Present worth, IRR, NPVI for this project.

7. As the manager of exploration for Chieftain Oil & Gas, you are evaluating a new offshore oil recovery module that will recover oil and gas deep in the Gulf of Mexico. The expected cash flows are: Initial investment $150 Million Net cash flows years 1 to 5, $20M (Million), $60M, $90M, $60M, $30M, then well depleted, no s

Financial Impact of Outsourcing Landscaping Functions

With this data I need to find out: 1) The one year financial impact of outsourcing the grounds maintenance 2) How will savings in the second year differ from year one 3) Find qualitative factors that should be considered in the decision whether or not to outsource. Here is the data for this problem: College A is consideri

Electric generating plants of the Tennessee Valley Authority

Some of the electric generating plants of the Tennessee Valley Authority are powered by coal. Coal is purchased by a separate procurement division and is transferred to the plants for use. Plant managers complain that the coal is below grade and causes problems with plant maintenance and efficiency. What do you think is causi