Economics

Market Structures and Pricing Decisions Applied Problems Please complete the following two applied problems: Problem 1: Robert’s New Way Vacuum Cleaner Company is a newly started small business that produces vacuum cleaners and belongs to a monopolistically competitive market. Its demand curve for the product is expressed as Q = 5000 – 25P where Q is the number of vacuum cleaners per year and P is in dollars. Cost estimation processes have determined that the firm’s cost function is represented by TC = 1500 + 20Q + 0.02Q2. Show all of your calculations and processes. Describe your answer for each question in complete sentences, whenever it is necessary. a. What are the profit-maximizing price and output levels? Explain them and calculate algebraically for equilibrium P (price) and Q (output). Then, plot the MC (marginal cost), D (demand), and MR (marginal revenue) curves graphically and illustrate the equilibrium point. b. How much economic profit do you expect that Robert’s company will make in the first year? c. Do you expect this economic profit level to continue in subsequent years? Why or why not? Problem 2: Greener Grass Company (GGC) competes with its main rival, Better Lawns and Gardens (BLG), in the supply and installation of in-ground lawn watering systems in the wealthy western suburbs of a major east-coast city. Last year, GGC’s price for the typical lawn system was $1,900 compared with BLG’s 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 were installed by do-it-yourself homeowners because the parts are readily available at hardware stores.) GGC has substantial excess capacity–it could easily install 25,000 systems annually, as it has all the necessary equipment and can easily hire and train installers. Accordingly, GGC is considering expansion into the eastern suburbs, where the homeowners are less wealthy. 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: Qw =2100 – 6.25Pgw + 3Pbw + 2100Ag – 1500Ab + 0.2Yw for the western market and Qe = 36620 – 25Pge + 7Pbe + 1180Ag – 950Ab + 0.085Ye for the eastern market, where Q refers to the number of units sold; P refers to price level; A refers to advertising budgets of the firms (in millions); Y refers to average disposable income levels of the potential customers; the subscripts w and e refer to the western and eastern markets, respectively; and the subscripts g and b refer to GGC and BLG, respectively. GGC expects to spend $1.5 million (use Ag = 1.5) on advertising this coming year and expects BLG to spend $1.2 million (use Ab = 1.2) on advertising. The average household disposable income is $60,000 in the western suburbs and $30,000 in the eastern 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. GGC’s cost structure has been estimated as TVC = 750Q + 0.005Q2, where Q represents single lawn watering systems. Show all of your calculations and processes. Describe your answer for each item below in complete sentences, whenever it is necessary. a. Derive the demand curves for GGC’s product in each market. b. Derive GGC’s marginal revenue (MR) and marginal cost (MC) curves in each market. Show graphically GGC’s demand, MR, and MC curves for each market. c. Derive algebraically the quantities that should be produced and sold, and the prices that should be charged, in each market. d. Calculate the price elasticities of demand in each market and discuss these in relation to the prices to be charged in each market. e. Add a short note to GGC management outlining any reservations and qualifications you may have concerning your price recommendations.

Part 1: Strategic Behavior Oligopolies An interesting example of strategic behavior comes from a 1997 article about Microsoft’s 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 Apple’s survival and, therefore, to ensure that competitiveness in the industry remains. Moreover, the partnership with Apple provided an additional market for Microsoft’s 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? Guided Response: In 300 words or more, please, provide your response to the above discussion question. Further, do you think Microsoft regrets taking action in light of Apple’s performance today? Respond substantively to at least two of your classmates’ postings. Substantive responses use theory, research, and experience or examples to support ideas and further the class knowledge on the discussion topic. Part 2: 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? Guided Response: Consider demand elasticity and market structure in your response. How is increasing of the price going to impact the company’s revenues given its demand elasticity? In 300 words or more, please, provide your response to the above discussion questions.

go to the web sites for the Bureau of Economic Analysis (bea.gov) and the Bureau of Labor Statistics (bls.gov).  Read the most recent summary reports for Gross Domestic Product (National Income and Product Accounts), Unemployment, and Inflation.  Pick one of these reports (indicate which at the top of your post) and identify two items that you found surprising (explain why) and two questions that you have about the reports.

Respond to the following in a minimum of 175 words: Innovation and physical capital are 2 of the 4 factors of production. Discuss some specific ways that 1 of the following laws increased the productivity of 1 or both of these factors of production: 1862 Pacific Railway Act 1956 Federal Aid Highway Act 1946 Federal Airport Act What other examples of economic concentration can you share? What are the risks and advantages to economic concentration? How has economic concentration influenced your industry?

Please analyze and contrast the Introduction and Literature Review of the articles below. All Articles can be found in EBSCO. ·         Briggeman, J. (2013). Paul Krugman. Econ Journal Watch, 10(3), 400–410. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=94876820&site=ehost-live&authtype=uid&user=grantham&password=Research1951! ·         What’s Wrong with Economics: A Discussion Between Paul Krugman and Jeff Madrick. (2015). Challenge (05775132), 58(2), 112–134. ·         Cochrane, J. H. (2011). How Did Paul Krugman Get It so Wrong? Economic Affairs, 31(2), 36–40.  You are expected to critically evaluate the three articles provided, identify themes and gaps, then synthesize what you have learned, keeping in mind Krugman’s economic impact. The paper should be a minimum of 1500 words in APA format.

1. What is the difference between foreign direct investment and portfolio investment? (13 points)2. What is the purchasing power parity exchange rate? (13 points)3. If a country’s currency is expected to appreciate in value, what is the impact of expected exchange rates on the interest rate paid on government bonds? (12 points)4. Would each of the following groups be happy or unhappy if the U.S. dollar appreciated? Explain.A. Dutch pension funds holding U.S. government bonds (2 points)B. U.S. manufacturing industries (2 points)C. Australian tourists planning a trip to the United States (2 points)D. An American firm trying to purchase property overseas (2 points)5. In 2010, a British pound cost $1.56 in U.S. dollars. In 2020, a British pound costs $1.66 in U.S. dollars.A. In 2010 was the pound weaker or stronger than the U.S. dollar? (2 points)B. Between 2010 and 2020, did the U.S. dollar appreciate or depreciate versus the pound?(2 points)C. Calculate the cost of a U.S. dollar in terms of British pounds in 2020. (2 points)6. Define the concepts of budget deficit and national debt, and explain how they differ from one another. (12 points)7. The economist Arthur Laffer pointed out that, in some cases, income tax revenue can actually go up when tax rates go down. Explain how this could be true. (12 points)8. Is it possible for a nation to run budget deficits and still have its debt/GDP ratio fall? Is it possible for a nation to run budget surpluses and still have its debt/GDP ratio fall? Explain. (12 points)9. Specify whether expansionary or contractionary fiscal policy would seem to be most appropriate in response to each of the situations below.A. A recession (2 points)B. A stock market collapse that hurts consumers and business confidence (2 points)C. Extremely rapid growth of exports (2 points)D. Rising inflation (2 points)E. The economy is at its natural rate of unemployment/potential GDP/LRAS. The government decides to enact a massive increase of expenditure. (2 points)F. A rise in oil prices (2 points) This work, “Written Assignment 4 Questions,” is a derivative of Principles of Macroeconomics 2e by Steven A. Greenlaw and David Shapiro, OpenStax, used under CC BY 4.0. “Written Assignment 4 Questions” is licensed under CC BY 4.0 by Thomas Edison State University.

Part 1: 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? Guided Response: Think about an example that pertains to you. If there is expected goodwill would you be prepared to bid lower to get a contract? Explain your reasons. In 300 words or more, please, provide your response to the above discussion question. Respond substantively to at least two of your classmates’ postings. Substantive responses use theory, research, and experience or examples to support ideas and further the class knowledge on the discussion topic. Part 2: New Production Introduction Bayer Schering Pharma AG, Germany owns 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. Alka-Seltzer Plus was a spin-off of the original medicine, meant to relieve colds and flu. The company has recently introduced a new and improved Alka-Seltzer Plus, as described in this TV ad (Links to an external site.). The ad shows that Alka-Seltzer Plus can fight congestion, unlike NyQuil. Explain how Alka-Seltzer Plus has been quality and price-positioned in an existing market. In your opinion, has Bayer positioned their product appropriately in the market for cold and flu symptoms relief products? Would you advise Bayer to use a skimming or a penetration pricing strategy? Explain your reasoning. How do you think Proctor and Gamble, the company who produces Vicks NyQuil, would respond to the ad? Guided Response: In 300 words or more, please, provide your response to the above discussion question. If Bayer is currently making normal profits on most of the products in its product line, but is making pure profits on its new Alka-Seltzer Plus with decongestant, what should Bayer do to increase its profits? Respond substantively to at least two of your classmates’ postings. Substantive responses use theory, research, and experience or examples to support ideas and further the class knowledge on the discussion topic.

present and explain how costumers the purchase decision was influenced by various economic, social, cultural, and psychological factors learned about the product (Nintendo switch). Your presentation will be evaluated based on perceived level of preparation, appropriate identification of factors, creativity, and effectiveness of your delivery.  The product is Nintendo switch

Managerial Decision Making Research and Analysis Focus of the Final Paper: Research a specific company of your choice and identify some of the managerial decisions that were made over time and in response to changes in its market or competitive environment. Use the Ashford University Library and web-based sources for your research. At least three external scholarly sources must be used in addition to the textbook.  Address all of the following areas: Describe the company and provide a brief history of its operations. Find or use graphs to illustrate its financial performance over the years. Describe 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 company’s financial outcomes? Be specific. Are there any government regulations that have affected this company’s operations domestically or abroad? Explain. Describe the inputs that are used in this company’s production function and identify any challenges to securing these inputs. Determine if the company has introduced new products in existing markets or created new markets over time. What is the impact on its finances? Determine if the price of its products increased or declined over time and analyze the reasons for price fluctuations. Study the demand elasticity for its products and discuss the availability of close substitutes for its products. How does that affect pricing decisions? Analyze the company’s profitability. Identify the economy or industry influences on its costs, operations, and profitability. Describe the competitive environment in which the firm operates, the distribution of market power, and the strategic behavior of the firm and its competitors. Apply your knowledge of the theory of this company’s market structure. How does the company make pricing and production decisions? Is your observation supported by the theoretical models? Refer to the financial reports for illustration.  Describe any non-price competitive strategies that the company might be engaging in. Provide specific examples. Evaluate if the company made any mistakes in its decisions over time, and recommend any changes or improvements for 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.

In the module you watched a video of Stiglitz critique GDP as a measure of well-being and you learned that Sen also rejects that as a measure of development.  For another critique of GDP you may want to read this article from The Economist .   For a defense of the use of GDP you may want to look at this post by Nicholas Oulton titled Hooray for GDP?  GDP as a measure of wellbeing  (Links to an external site.) ?https://voxeu.org/article/defence-gdp-measure-wellbeing?.    In this discussion I want you to make an argument why we should continue to use GDP or why we should replace this measure with another.  You will need to think of the purpose of its use and how that interacts with your argument.  For example, you may argue that it is a very good measure to use for one purpose, but for a different purpose we need a different measure.   If you argue that we should replace it, you need to identify another measure that, while not perfect, would be better.   Be sure to make an original argument (to this forum), and comment on at least two of your classmate’s postings.  Good comments will critique, extend, or clarify your classmate’s postings.     Grading Information Your work will be graded based on how well the following criteria are addressed: Development of Ideas Evidence of Critical Thinking Responses to Other Students and Instructor