Questions and Answers of Managerial Economics And Business Strategy

The U.S. International Trade Commission's committee in charge of the global safeguard investigation involving imports of steel has announced its recommendations to be forwarded to the president. Of
China’s entry into the World Trade Organization (WTO) is likely to create more competition between local and foreign firms, as well as provide China greater access to the market for exports. This
Section 16(a) of the Securities and Exchange Act of 1934, as amended in 1990, requires that the officers, directors, and principal shareholders of companies disclose the extent of their ownership of
Is “fairness” the economic basis for government laws and regulations designed to remedy market failures? If so, why; if not, what is the economic basis?
Social Dynamo Corporation earned profits last year of $49 million on sales of $500 million. During the same period, its major competitor—EIO Corp.—enjoyed sales of $490 million and earned profits
Between 1972 and 1981, Texaco sold gasoline to independent Texaco retailers at “retail tank wagon prices” but granted substantial discounts to distributors Gull and Dompier. Gull resold the gas
Attorneys for Eastman Kodak argued in front of the U.S. Supreme Court to defend the company against charges levied by several independent firms that provide service for machines sold by Eastman
Explain, using precise economic terminology, the economic rationale for laws against insider trading.
Bank 1 and Bank 2 are considering entering a compatibility agreement that would permit the users of each bank’s ATMs access to the other bank’s ATMs. Bank 1 has a network of branches and
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
UNIX is a powerful multiuser operating system designed for use with servers. UNIX’s popularity has grown since it was developed by Bell Labs in 1969, as record numbers of users are logging onto the
You are the manager of an international firm headquartered in Antarctica. You are contemplating a business tactic that will permit your firm to raise prices and increase profits in the long run by
A risk-neutral consumer is deciding whether to purchase a homogeneous product from one of two firms. One firm produces an unreliable product and the other a reliable product. At the time of the sale,
Many home improvement retailers like Home Depot and Lowes have low-price guarantee policies. At a minimum, these guarantees promise to match a rival’s price, and some promise to beat the lowest
You own a franchise of rental car agencies in Florida. You recently read a report indicating that about 80 percent of all tourists visit Florida during the winter months in any given year, and that
You are the manager of a local sporting goods store and recently purchased a shipment of 60 sets of skis and ski bindings at a total cost of $30,000 (your wholesale supplier would not let you
Does the presence of online auction sites, such as eBay, make it easier or harder for traditional retailers and wholesalers to engage in profitable price discrimination? Explain.
According to some translations, Nobel Laureate Albert Einstein once said, “God does not play dice with the universe.” Does this mean that a profit-maximizing firm would never use something like
A large firm has two divisions: an upstream division that is a monopoly supplier of an input whose only market is the downstream division that produces the final output. To produce one unit of the
Price comparison services on the Internet (as well as “shopbots”) are a popular way for retailers to advertise their products and a convenient way for consumers to simultaneously obtain price
Suppose a UAW labor contract with General Dynamics is being renegotiated. Some of the many issues on the table include job security, health benefits, and wages. If you are an executive in charge of
Semi-Salt Industries began its operation in 1975 and remains the only firm in the world that produces and sells commercial-grade polyglutamate. While virtually anyone with a degree in college
The opening statement on the Web site of the Organization of Petroleum Exporting Countries (OPEC) says, “ . . . OPEC’s eleven members are all developing countries whose economies are heavily
You are the manager of the only firm worldwide that specializes in exporting fish products to Japan. Your firm competes against a handful of Japanese firms that enjoy a significant first-mover
The CEO of a major automaker overheard one of its division managers make the following statement regarding the firm’s production plans: “In order to maximize profits, it is essential that we
The four-firm concentration ratios for industries X and Y are 89 percent and 62 percent, respectively, while the corresponding Herfindahl-Hirschman indexes are 2,600 and 1,200. The Dansby-Willig
Evaluate the following statement: “Managers should specialize by acquiring only the tools needed to operate in a particular market structure. That is, managers should specialize in managing either
EFI—a material handling company—pays each of its salespersons a base salary plus a percentage of revenues generated. To reduce overhead, EFI has switched from giving each salesperson a company
Suppose that Honda is on the verge of signing a 15-year contract with TRW to supply airbags. The terms of the contract include providing Honda with 85 percent of the airbags used in new automobiles.
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
DonutVille caters to its retirement population by selling over 10,000 donuts each week. To produce that many donuts weekly, DonutVille uses 1,000 pounds of flour, which must be delivered by 5:00 AM
During the beginning of the 21st century, the growth in computer sales declined for the first time in almost two decades. As a result, PC makers dramatically reduced their orders of computer chips
The World of Videos operates a retail store that rents movie videos. For each of the last 10 years, World of Videos has consistently earned profits exceeding $25,000 per year. The store is located on
The average 15-year-old purchases 12 CDs and 15 cheese pizzas in a typical year. If cheese pizzas are inferior goods, would the average 15-year-old be indifferent between receiving a $30 gift
Determine which, if any, of Properties 4–1 through 4–4 are violated by the indifference curves shown in the following diagram.
G.R. Dry Foods Distributors specializes in the wholesale distribution of dry goods, such as rice and dry beans. The firm’s manager is concerned about an article he read in this morning’s The Wall
Some have argued that higher cigarette prices do not deter smoking. While there are many arguments both for and against this view, some find the following argument to be the most persuasive of all:
What is the value of a preferred stock that pays a perpetual dividend of $75 at the end of each year when the interest rate is 4 percent?
Levi Strauss & Co. paid $46,532 for a 110-year-old pair of Levi’s jeans—the oldest known pair of blue jeans—by outbidding several other bidders in an eBay Internet auction. Does this situation
As the manager of a focus group company, you are interested in optimizing the number of participants you include in focus groups for your clients. Over the past year, you ran a field experiment,
Suppose that News Corp., which controls the United States’ largest satellite-to-TV broadcaster, is contemplating launching a Spaceway satellite that could provide high-speed Internet service. Prior
Which of the following would most likely be scrutinized under the FTC and DOJ Horizontal Merger Guidelines?a. Two major players in Internet services and retailing—Amazon.com and eBay—mergeb.
As a manager in a monopolistically competitive industry, you are trying to determine the optimal price for your product. You’ve asked the analysts in your firm to determine as closely as possible
As a newly hired manager at your firm, you decide to start your tenure by assessing the sensibility of your current advertising expenditure. To do this, you ask your analytics team to collect useful
You are a new entrant in a market with just one incumbent, who sells a roughly equivalent product. You initially take on the follower role when it comes to choosing the amount of your product to
Suppose a single firm produces all of the output in a contestable market. Analysts determine that the market inverse demand function is P = 150 − 2Q, and the firm’s cost function is C(Q) = 4Q.
Your firm competes in a local duopoly. You’ve hired consultants to examine how your rival responds to changes in your prices. To do this, over a period of time, your consultants helped your firm to
Use the following one-shot, normal-form game to answer the following questions.a. Find each player’s dominant strategy, if it exists.b. Find each player’s secure strategy.c. Find the Nash
Both Google and Amazon are major players in the smart home market, using their own internally developed smart home control systems (Google Assistant and Alexa, respectively). Suppose each is
Your company just became international, by offering its products in both the United States and Canada. Experts in your analytics department believe that tastes for your product differ in those two
As an online video commentator, you are committed to offering your videos without ads. Until now, you’ve experimented with different per-video prices for your content and collected user-level data