Managerial Economics

*Select an industry and analyse how macroeconomic factors could affect the development of the market of that industry in the next 5 years. Start with characterising the cost structure of the industry and then consider the macro factors such as the volatile economic landscape, changing consumer preferences, the impact of Covid, rising level of debt, etc. – how they would influence demand (and hence revenue).

This is just an example (please don’t use the same topic)– the airlines industry is cost-laden, and any of the macro factors listed above are going to hit hard this industry

Produce a (hard) maximum 800-word paper. Tables and figures are not part of the word count

Please remember:

  • The underlying content – quality of argument and evidence presented. Make sure to use class learnings or slides
  • Error-free writing/quality control inclusion and richness of references used
  • Structuring/storylining – tell a story, don’t just describe
  • English writing – quality control of spelling and basic grammars
  • Deliverable style – professional quality formatting and presentation. Table of contents must be included. Appendix

Rubric rating:

-Action Recommendations

Recommended course of action has strong arguments based in the analysis and issues and includes anticipated consequences and alternatives.

-Issue Analysis

Presents an accurate and detailed description of a variety of problems and opportunities that are compelling and insightful.

-Organization and Clarity

Paper demonstrates concise and consistent writing. Transitions between ideas are handled well. Formatting is appropriate and writing is free of grammar and spelling errors.

-Use of Course Concepts

Demonstrates complete command of tools and concepts from the course. Makes appropriate and powerful connections between identified issues and the strategic concepts studied in the course readings and class lectures.

-Sources & Citation

Evidence and ideas clearly refer to subject matter and aim of assignment, drawn from a range of sources, in addition to assigned readings and in-class discussions, including scholarly books, journal articles, research institutions, government publications, and industry associations. All evidence is properly cited in APA style in-text citations and a correctly formatted reference list.

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managerial econo,mics

Here is the 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.

  1. 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.
  2. Are they likely to make economic profits initially? Can they continue to make economic profits in the long term? Why or why not? Discuss.
  3. 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.

BUS640 Week 5, Problem 2 Chart

Show all of your calculations and processes. Describe your answers in three- to five-complete sentences.

  1. What price would you bid if you must win the project?
  2. What price would you bid if you want to maximize the expected value of the contribution from this contract?
  3. Defend your answers with discussion, making any assumptions you feel are reasonable and/or are supported by the information provided.

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