...normal signature and student number above and on the cover of the exam book(s) used. PART A: Multiple Choice Questions (30%) 1. Market supply curves tend to be more price elastic if the time period is long rather than short because— a. Firms are better able to adapt their output rates to price changes in the long run. b. External economies will be realized. c. Consumers are better able to find substitute goods. d. Input prices would be expected to increase with the length of the time period. e. Economic profits are reduced to zero in the long run. Marginal product exceeds average product when— a. Total product is increasing. b. Average product is increasing. c. Average product is decreasing. d. a and b. e. a and c. A frequently cited reason for increasing returns to scale is— a. Increased input prices. b. Greater specialization. c. External diseconomies. d. Larger fixed costs with a larger plant size. e. Difficulty of managing a huge enterprise. 2. 3. C5, Economic Environment of Business, Final Examination, page 1 of 8 1 4. In determining whether to add an additional flight to an established airline, which of the following costs are irrelevant? a. Depreciation on the existing aircraft. b. The salary of the president. c. Insurance on the aircraft. d. Administrative costs. e. All of the above. If the two assumptions of profit maximization and freedom of entry and exit are satisfied, then in the long run each firm will operate where— a. Price equals short-run and...
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...Case Scenario Read the following case scenario carefully and answer all the questions given at the end of the case. Sugar the new oil as prices soar By Andrew Clark The price of sugar on global commodity markets has doubled since the beginning of the year and is close to a 28-year high as hedge funds and speculators jostle to bet on the possibility of an international shortage of the world's favourite natural sweetener. For financiers seeking adrenaline-driven price lurches, sugar has become the new oil. Historically, raw sugar has traded at between 10 and 12 US cents per pound at the New York Board of Trade. But the price briefly touched 24.85 cents last month, its highest since 1981, and sugar is now hovering around the 23 cent mark. The rise has come amid a broader commodity boom. Metals and energy rose sharply today as the dollar weakened and global stock markets moved higher. There are some solid underlying reasons for the upward lurch in the price of raw sugar. Heavy rain has disrupted milling in the world's largest producer of sugar, Brazil, where a sizeable portion of sugarcane has been diverted from food use into ethanol fuel. Meanwhile the biggest consumer of sugar, India, has had a dismal monsoon season and has gone from being a net exporter of sugar to an importer. "The key premise has really come from Brazil and India," said Sudakshina Unnikrishnan, a commodities analyst at Barclays Capital. "The bulk of the problem lies in inclement weather conditions...
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...Legal, Social, and Economic Environments of Business Tracy A. Cook American Intercontinental University Introducing a New Product The business environment consists of three ownership types. Sole proprietorship, partnerships (General and Limited), and corporations. Each will be discussed and defined. Each has its advantages and disadvantages. Both will be discussed. Introducing new products requires research, financing and learning the laws of business. I will also describe my new product and my decision will be discussed and why. INTRODUCING A NEW PRODUCT When starting a small business or introducing a new product there are three types ownership to consider. They are Sole Proprietorship, Partnership, and Corporation (Editorial Board, 2011). The first is sole proprietor. Which means the business is owned and operated by one person (or married couple that files taxes jointly). There are many advantages when considering this type, to include easy starting up and dissolving, complete control over decisions, and sole ownership of all profits. There are companies and corporations that started out as sole proprietorship. Wal-Mart (Editorial Board, 2011) started out this way and grew to be one of the biggest retail stores. Ebay was started by Pierre Omidyar (Director, Apr2006). In 1995 he set up a small internet site as an experiment. It quickly became one of the most popular sites on the...
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...The Legal, Social, and Economic Environment of Business Michelle Casey Introduction to Business Unit 1 Legal, Social, and Economic Environments of Business When a person decides to start up a business of any kind, they have to decide what type of business it is going to be. There are three major types of businesses; sold proprietorship, partnership and corporation (Griffin 2005). Before deciding which the best one for the business is, the owner needs to know what each one is and how it operates. A sole proprietorship is a business that is owned and operated by only one person. Anyone can open up a business as a sole proprietor as long as they have the means and know how to do so. A lot of the “mom and pop” stores throughout the United States are classified as a sole proprietorship. They tend to be family owned and are very personable with their clients or customers which appeals to consumers. A partnership is when two or more people get together and decide to start a business. They decided how it will operate and how the profits will be shared. Most partnership businesses have people who are skilled in different areas which help the business become more successful. A corporation is when a group of stockholders have ownership of the business. A corporation can be expanded very easily throughout the United Stated. They have more funding available to them then any other kind of business form. The banks are more willing to lend money to corporations mainly...
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...Legal, Social, and Economic Environments of Business Johnathon L. Olive American InterContinental University Online Abstract Johnathon Olive, the writer—was given a scenario to write about using the different types of businesses. He made a management decision regarding which business type he believed would be the most likely to succeed and why based on the scenario. He also listed advantages and disadvantages of each business type regarding the scenario. Finally, he acknowledged the issues and prior knowledge of manufacturing a new product. Legal, Social, and Economic Environments of Business Have you ever had a lot to say to a special person, but never knew exactly how to put it together in a nice, sweet conversation? I have, it’s quite frustrating—I must add. It’s the same feeling, when you come up with a great idea or invention, but you have no idea of how you should go about getting your invention up off the grown and running. This will be based off a scenario of an inventor who enjoys working around the home, cleaning, cooking, and doing minor home repairs and remodeling. You have to consider how much knowledge you have on manufacturing a product, advantages and disadvantages of each business type, and making a management decision regarding which business type you believe would be most likely to succeed and why. How much knowledge do you have on manufacturing...
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...Global Economic Environment In: Business and Management Global Economic Environment Global Economic Environment Generally, global economic environment is influenced by various factors such as technological, environment, political, socio-cultural, and demographic that directly affects businesses. Economic environment refers to the nature of economic systems and policies, distribution of income and wealth, and level of income. Indeed, economic environment has a complex and very dynamic nature; it is continually changing along with the changes in political situations and government policies. Global Economic Environment Mainly, global economic environment is comprised of several components including the economic systems, conditions, policies, legislations, and environment. Indeed, the economic policies being imposed in every business unit are significantly influences by the overall condition of economy. This includes the improvements that occurred in economic conditions such as the purchasing power of the public, standard of living, distribution of income, and supply and demand. Mainly, these factors reflect the size of the market. Another factor reflecting the economic condition is the business cycle, which is critical to every business unit. It refers to the different stages such as prosperity, boom, decline, depression, and recovery. The economic condition of a country can be understood through its national income, per capita income, and distribution of income, demand and...
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...Economic Growth- GDP Economic Growth… …An increase in an economy’s ability to produce goods and services Gross Domestic Product- represents the value of a country’s national income in one year. An increase in real GDP means that the standard of living within a country is increasing. It is therefore used as a way of measuring a country’s economic growth. The Business Cycle- there are discernable patterns in these levels over time, there will be periods of time when economic activity is rising and other times when the level of economic activity slows down. The Business Cycle The Four Stages of the Business Cycle are: Boom: A period of very fast economic growth, with rising incomes and profits. Inflation will rise and there will be shortages of key skilled worker, leading to high wage increases. High inflation will make the country less competitive, and business confidence will eventually fall due to rising cost. Interest rates are increased to slow down growth. Recession/Downturn: Demand stats to fall as interest rate rise. Real GDP stats to slow and will eventually fall. Incomes and demand fall, as do profits. Some firms will be forced out of business. Possible Strategies during a recession: • Close down arts of the business and make redundancies • Develop new products that appeal to customers as income fall • Lower price to maintain sales • Look to expand, as prices will be much lower than during a boom • Target growth markets overseas Slump/Trough: Real...
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...in the negative output gap will cause inflation to go down. The only time inflation increases with increasing negative output gap is when the AS curve shifts left and AD shifts down as well. To substantiate this, the following data has been presented as below, with main emphasis in the 2007-2008 periods: 1. Figure 8a (Research.stlouisfed.org, 2013 and Databank.worldbank.org, 2013) shows that from around 2008 the U.S. has increasing negative output gap. 2. Figure 8b (Databank.worldbank.org, 2013) shows that around the same time, GDP was shrinking and there was a spike in inflation (consumer prices). There were different elements at play in this time in the U.S. like the housing market crash and it was the start of an economic downturn, but increased commodity prices made inflation spike...
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...Describe the three basic/core economic problems facing all economies. Economic problems emerge because our desire for goods and services to consume is greater than our ability to produce those goods and services. As humans, we have unlimited wants and limited resources. This is referred to as scarcity, which exists because there are insufficient resources to produce the goods and services to fully satisfy all wants. Another part of the problem is the fact that resources are not distributed evenly between countries and societies. As a result we are forced to choose among alternative options. For example, you might go into a shop and see two great-looking pairs of jeans but you only have enough money (resources) to buy one of them. Another example is that, a business might have received a major order for its products and wants to increase production but does not have the staff or the equipment and raw materials to meet the order in full. The above mentioned examples highlight the problem of scarce resources in relation to wants and needs. Because no economy can produce enough goods and services to satisfy all its citizens’ wants, choices must be made. The decision to have one thing over another involves a cost. Not a monetary cost, but what is known in economics as an opportunity cost, that is the next best alternative foregone. In other words, the cost of any choice that you make is the value of the best opportunity that you give up in order to make that choice. In an economy...
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...Mabinty Turay unit :1 Barbara mercer/ Scott Hagan Task: 1 (p1) Describe the type of business purpose and ownership of two contrasting businesses. Sainsbury's Sainsbury's supermarket is one of the UK's longest standing foods retailing chain, Sainsbury's opened its first store in 1869. Sainsbury's brand was built through a heritage providing their customers with healthy, fresh, safe and tasty food. Sainsbury’s is the second largest chain of supermarket in the United Kingdom with a share of the United Kingdom supermarket sector of 16.9%. Sainsbury’s became the largest grocery retailer in 1922. Sainsbury's main purpose: Sainsbury’s purpose is to provide a value for money, retail outlet for the general public. Also Sainsbury’s purpose is for them to deliver an improving quality shopping experience to their customers with great products at fair prices. Sainsbury's have a chain of 504 supermarkets and 319 convenience stores. Sainsbury's store also offers around 30,000 products. And their increasing number of stores also offers complementary non-food products and services. Sainsbury's is also currently in the tertiary and secondary sector, it because Sainsbury's provide services, they have banks, sell food they even have their own farm. Sainsbury's is a large business and it have about 161,000 employees working for the business in 2014, Sainsbury's operate in the United Kingdom. ...
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...of two contrasting economic environments on business activities within a selected organisation Start the question by explaining that the UK economy is currently in a recession. Explain why you think the UK economy is in a recession by using the following indicators that are used to indicate recession; they include, GDP (Gross Domestic Product)- Very Low currently in the country, state how this will affect your business organization. Give at least three examples; it can be positive or negative. Unemployment: Identify the fact that the numbers of unemployed is very high in the country. Explain how this will affect your business organization. Give at least three examples of positive and another three for negative influence. Inflation: Talk about the inflation rate (Very high), explain how this will affect your business organization. Give at least three examples of positive and another three for negative influence. Interest rate base rate: Explain that the interest rate is very low, currently 0.5% in UK. Explain how this will affect your business organization. Give at least three examples of positive and another three for negative influence. House Prices: Currently very high to rent a house in the business district areas. Give examples of rent prices within your business location. How does the high rent affect cost? Give at least three examples of positive and another three for negative influence. Recession: All these negative impacts lead to economic recessions. You must...
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...P5 Describe the influence of 2 contrasting economics environments on business activities within a selected organisation Introduction In this task I will be talking about two contrasting economic environments on business activities for Harris Academy Peckham and Peckham. The economic environments will be recession, demand and supply. Supply and demand is perhaps one of the most fundamental concepts of economics and it is the backbone of a market economy. Demand refers to how much of a product or service is desired by product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and how much of a good or service is supplied to the market is known as the supply relationship. Price, therefore, is a reflection of supply and demand. Harris Academy Peckham Demand and supply In this section for the task, I will be discussing the demand and supply for the school, in the most important element to talk about of the demand for and the supply of the school places and the parents that they need to send their kids to the school. It will be not uncommon for the parents who they live in Peckham to send their children to the school or different school that they aren’t in the area. There is a leading-on of the effect to the firing teaching because they were not enough students to come to the school, in this would cause extreme in the implication of the school which is the...
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...P5- Describe the influence of two contrasting economic environments on business activities within a selected organisation In this task I would be talking about the influence of two economic environments on business activities. So this could be how Sainsbury’s in the UK operated during the recession and the boom period. The UK is in the growth economic environment and this means the country was before in the recession economic environment and now it is growing. This does not mean they are a rich country compared to China. Economic • Importance of stability- stability is when business people can make predictions for the short and the medium term about likely demands for their products in the near future. For example, Sainsbury’s might want to have stability because they want to make sure the company is able to continue to make sales and profits. Stability involves being able to make deals which are secure. So when you borrow money from someone, you want to make sure you get the accurate payment. Sainsbury’s would want to make sure their stakeholders are getting what they want and to form a stable relationship with their stakeholders. For example, Sainsbury’s offers stability to Fair-trade cotton farmers. Sainsbury’s have committed to buying a year’s worth of cotton during the harvest period. This will allow the famers to plan how they use their money, as they will have a guaranteed annual income. Ninad Gupte, from the Project Executive Body Agrocel, said, “Cotton prices...
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...M2 - Compare the challenges or selected business activities within selected organisation in two different economic environments In this task I will compare the challenges to selected business activities in two different economic environments. | Supply | Economic | Waitrose | Availability of raw materials and labour – Waitrose are impacted by this because the less raw materials there are, the harder it is for them to meet the demand on products. Waitrose will increase the supply of a product depending on the demand of this, and the demand on the product could also influence the price.Logistics to produce products profitably – Waitrose are impacted by this as they would have to run analysis checks on the supply chain (they would have to hire someone who is skilled in this department) they would have make sure they are producing products in the most cost effective way that is possible. Without their Competition for raw materials – Waitrose are impacted by this as they need raw materials for their business to strive, with developing countries having a bigger influence in the purchases of raw materials it is harder for Waitrose to get these materials at the price and rate that they want these products at. Waitrose have to take advantages of the periods in which raw materials is at a lowered price. | Stability – This impacts Waitrose as stability in the marketplace will allow them to forecast how well they think the business will do in the coming months, it will also allow them...
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...million passengers include 3.1 million passengers on international flights and 3.7 million in domestic flights. In addition, they also carried 106 thousand tons of goods. (Vietnam Airlines, 2006) Part 2 The structure includes: The Head Office consists of Divisions and Departments. Dependent Units: Consists of 14 dependent units, 32 branches, and representative offices at 20 countries and territories. These are parts of our integrated supply chain. Having many levels of hierarchy, the company can be described as a tall organization with the span of control is narrow The Board of Management: is the authorized representative of the Government in Vietnam Airlines, responsible for the rights and obligations of the State in their business. The term of Members shall not exceed 05 years. The Members can be reappointed. The President & CEO: The President & CEO is the legal representative of their company and is in charge of their daily operations in accordance with the objectives, plans, resolutions and decisions of the Board of Management and with the corporate charter, prevailing laws and regulations. They are legally accountable for the performance of their assigned tasks. Vice Presidents and Chief Accountant: shall be appointed,...
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