...How People Make Economic Decisions Anne Miller Eco/212 September 18, 2012 Instructor Name According to Jody Beggs ofAbout, com and I quote, “simply, and perhaps surprisingly put, economics is the study of scarcity, for the resources one limited to and, ever society wants to figure out how to allocate its resources.” “For all of the maximum benefits the field of economics serves the large part to help answer this1 And then knowing how those people try to make each and, every decision whether it is good or bad. Will be said later, on in this paper. As each day comes along there can be some changes in their daily lives. Such as major, changes / minor changes. Those changes are also in our economic life as well. Figuring out where those changes will impact our large corporation/business. Is something that is constantly being measured on a daily basis, by those that work within the economic forecasting process? As to the benefit , it is being felt daily usually that is by those who it is being put upon the most. That is us the consumer/worker, for we are the ones that feel each price hike, or price cut. And we need to take into account the large corporation/business ways of handling how they do their measuring of benefits. For us the consumer we do what is called the stop and think ways, then we also do the tradeoff methods as well. For we have developed steps as consumers/workers to use. Step One : Do we spend less time waiting in line for less prices Step Two: Do we spend...
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...Change Simulation Experience “It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change.” - Charles Darwin Charles Darwin’s groundbreaking theory of evolution was certainly not restricted to species in the wild. Adapting to change in any corporate environment is fundamental to the success of any organization and its employees. Achieving this success depends on a key ingredient – appropriate application of change management that focuses on increasing levels of commitment to change and decreasing levels of resistance. Our group perceived the ‘Global Tech Change Simulation’ to be reflective of real life organizational change as it recreated a business scenario that needed to follow a multi-step process in a timely and sequential manner in order to have a successful outcome. There are challenging barriers to change which include acceptance, adaption and resistance, and each obstacle requires the use of change leadership and best practices to guide an organization through such a transition. Our Approach: What Worked Our group was aware of how essential it was to follow the seven-step Experience Change Model and categorized each tactic according to our analysis of where it belonged within the model – see Appendix A. We started our simulation with balanced participation through stakeholder mapping to ensure that key stakeholders in all departments understood the need for change. Stakeholder mapping allowed us...
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...Guillermo Furniture Store Finance Concepts July 2, 2011 FIN/571 Guillermo Furniture Store Finance Concepts The risks associated with financial concepts in the case of Guillermo Furniture raises when a company considers joining forces with another company. In such a case with Guillermo Furniture, trying to forecast future purchasing of materials is more difficult because the chance for over purchasing may come into play if the company does go the route to sell itself to a competitor. The questions that come to the forefront is whether the merger will pick up what the other company has on hand. Risks vs. Reward Guillermo Furniture having been approached by a competitor about joining forces brings into play the idea of risk vs. reward. Guillermo Furniture has thought about selling the company or maybe closing the business and possibly merging with the competition. Should Guillermo Furniture do any of the above, what are the risks vs. reward in any of these options? Using information obtained from the sales forecast is used to create the sales budget. “This budget is a result of decisions to create the conditions that will generate a desired level of sales.”(Horngren, 2008). Managers usually take into consideration a number of factors when examining risks for their company. These factors can be looked upon as risks for the company as well. Some of the factors include reviewing past patterns of sales which can be used to help with predicting future...
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...Economics Jessica Florian BUS640 Managerial Economics Prof. Hong Zhao July 30, 2012 Problems Chapter 1 a) What is the total explicit, total implicit, and total Economic costs in 2010. Explicit costs are defined as monetary opportunity costs. Explicit costs would be the accounting costs listed =$628,000. Implicit costs are defined as nonmonetary opportunity costs. = $15,000 (this is potential gain in stocks) + 175,000 (salary) = $190,000 The economic costs would be the total of explicit plus implicit $818,000 b) What is accounting profit in 2010? The income statement shows the profit listed as $177,000. c) What is the economic profit in 2010? Economic profit would be accounting profit minus implicit costs. That would be: $177,000 minus $190,000. d) In reviewing the decision to leave his job and start Sound Devices the recent numbers will show a profit or a loss. A positive economic profit which means that he made the right decision. A negative economic profit would mean that he made the wrong decision. Chapter 2 Problem 2 a) The price of oranges will increase. The supply of oranges will decrease due to the destruction. b) The price of oranges will decrease. The supply of oranges will decrease. c) More demand for orange juice, Price will increase for oranges, Supply will be ready. d) Grapefruit may or may not have an effect. Maybe the price and supply will...
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... 2 3 4 5 6 Gasoline Production (thousands of Barrels) 0 1 2 3 4 5 6 Gasoline Production (thousands of Barrels) In this scenario, two goods can be produced, cars and gasoline. Each point in the production possibilities curve is a reprehensive of the output of both products when resources are skewed towards either method. Understanding this, if more resources are utilized towards production of cars, then there is less that can be used for gasoline, resulting in the decrease of output. Anything within the curve is attainable at full employment and anything outside is not. The shape of the curve is affected by the law of increasing opportunity costs. “As the production of a particular good increase, the opportunity cost of producing an additional unit rises” (McConnell et al, 2012) resulting in the bowing of the curve out. At the extremes, all of the resources are utilized for one product leaving nothing available for the other....
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...integration should be based in terms of their impact on product performance, their technical complexity, their impact on product development time, and their impact on product cost. It not necessary that if 100 suppliers are required to be integrated, all the suppliers will be ready to become the part of the early development process. If company is thinking for long term integration then the supplier's future capabilities may be as important as their current capabilities. Supplier involvement in a product development effort can sometimes be uncomfortable and therefore without commitment in both organizations, the communication and sharing of information and resources necessary to make the relationship work will probably not occur. The number of potential supplier’s involvement in this situation will depend on all these factors and hence cannot be assigned a number. It can be 100 or it can be 0 2. Are there tradeoffs in terms of the number of suppliers to integrate? If so, what are the tradeoffs Yes, there are tradeoffs in terms of the number of suppliers to be integrated. Depending on the type of different skid-steers will be developed the suppliers has be integrated in initial stage. a. Purchasing – The suppliers need to be identified from whom the company will buy products to reduce cost. b. Cost or Price – From above price is the second...
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...Healthcare Corp. Curtis Douglas March 10, 2013 Interwest Healthcare Corp. What are the potential sources of the problems? It seems there is conflict between Vijay Singh the Chief Financial Officer (CFO) of Interwest and the Operations staff (Hospital Administrators). Singh is accusing the hospital administrators of not being detail oriented when entering patient information in the Management Information System. The hospital staff is accusing Singh of not caring about patient services. There’s opportunity cost from both Singh and the staff, as Singh is in need of the data entry to be accurately entered because it affects federal funding and management reports. However, the hospital staff finds patient services more important than correct data entry, therefore, the source of the problems are the values each side considers more important (opportunity cost). Management implications are another source of problems -Understanding what motivates individuals is critical (Brickley, Smith & Zimmerman, 2009). Also, both sides must understand what is in the best interest of the company. What information would you want to analyze? As the consultant, I would want to analyze the current processes that are in place for employees that perform the data entry task to find out what causing the problems in data entry. Time Management should also be reviewed and the value the staff place on entering data in the system. I would...
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...Chapter 1 Question #4 What is the difference between economic profit and accounting profit? Why should managers focus mainly on economic profits? Why do you suppose managers often focus on accounting profits? The biggest difference between accounting and economic profit is that accounting profit is based on verifiable historical data and does not take opportunity costs (time and capital) into account when determining the profit. For example, Kobe Bryant might consider leaving his basketball career to start a lawn mowing business. Is this a smart choice? In accounting profit calculation, which omits opportunity costs, the lawn mowing business would look lucrative if he’s making big profit. Perhaps people might pay $100 an hour to have a celebrity athlete cut their lawn. However, in economic profit calculation, he must subtract the opportunity cost of about the $50M he would be making as a Laker (2012 annual earnings according to Forbes) to realize the profit of his lawn-mowing venture? Management should focus mainly on economic profits because by factoring in the opportunity costs, it allows them to make the best decision to better allocate their resources of all other competitive alternatives. If they don’t, they could be choosing options that could prevent the firm from making more profit. Managers often focus on accounting profit method because they are easy to obtain and are more commonly used to present the company performance to the investors. ...
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...economic cost of such donations? c. Why do countries give aid? Construct an example to answer this question. 2. Suppose a hypothetical country Zion produces only wheat and clothing given the scarce resource that is land and labor. The production possibility curve of Zion is a straight line. The maximum number of wheat that can be produced is 1000 million bushels and the maximum amount of clothing that can be produced is 200 million garments. a. Draw the production possibility frontier\curve and shade the production possibility set. Measure the garments along the vertical axis. b. What is the equation of the production possibility frontier? c. Suppose Zion is on the production possibility frontier. i. What is the opportunity cost of producing garments? ii. What is the opportunity cost of wheat? iii. What is the marginal rate of transformation? How is it related to the opportunity cost? d. Suppose now there is technological innovation in the garment production sector. Given the same amount of resources Zion can produce 250 million garments. The production of wheat remains same. i. What is the opportunity cost of producing garments? ii. What is the opportunity cost of wheat? iii. What is the marginal rate of transformation? 3. (Continued from Question-2) Now suppose that Gaul is another country that produces garments and wheat. Given the resources Gaul can produce 500 million garments and 600 bushels of wheat. a. What is Gauls’s opportunity cost...
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...a competitive market exists for the product and market prices are readily available. - A drawback is that this method may require a change to the compensation/incentive system of Division managers Market price-based transfer pricing – A policy that sets transfer price at the market price or a small discount from the market price. From the company’s perspective, this is fine as long as the supplying unit is operating at capacity. Cost basis policy – A seller operating below capacity should transfer at the differential cost of production (variable cost). A seller operating at capacity should transfer at the market price. A seller operating below capacity is indifferent between providing the product and receiving a transfer price equal to the seller’s differential outlay cost or not providing the product at all. Full absorption cost-based transfers – if measures to market price are unavailable, impossible to compute opportunity costs for the general rule. This method results in transfer prices somewhere between variable costs and market prices. 3) Negotiated transfer prices - Discussion and agreement between the buying and selling parties is an option when autonomy is...
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...the latter only gave him freedom in setting targets, not in making the decision as to whether or not the assets should be sold. Jose went back to researching and planning for his first year managing the printing company. II. Problem Statements Short Term What factors or variables should Jose take into account as a means for increasing the net income of the Royal Printing and Packaging Company? Long Term What measures must Jose take in order to improve market standing, innovate operations, upgrade physical and financial resources and increase profitability in order to sustain consumer interest, confidence and loyalty? III. Areas of Consideration/Key Success Factors [in table form] Strengths Weaknesses Opportunities Threats Established customer base (S) Investments made in good condition machinery (S) Only 1 million pesos generated in company sales despite being in the business for 25 years (W) Expected boost in printing industry (O) International market ()) 6% increase in interest rate should assets be sold and...
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...Economics class has given me a better understanding of how important economics is to our daily lives. How Economics is used in my daily life There are 10 principles of economics and all of them are used in our lives but for the purpose of this paper I will be discussing how three are used in mine. Principle 2- Opportunity cost “Because people face trade-offs, making decisions requires comparing the costs and benefits of alternative courses of action.” (Cleverley, Song, & Cleverley, 2011) This principle refers to what you have to give up in order getting what you want. For example, you can choose to study for an exam or be with family and friends. If you choose to study, your opportunity cost is quality time with family and friends. Opportunity costs do not always have a monetary value associated with them, rather, the cost is: anything of value to the person assessing the situation including energy and time. I have chosen to spend three years of my live to go to college for my Bachelors degree. This is costing me time with family and money. Will it be worth the opportunity cost? I believe it will. It will help me financially and with a better job with better benefits I will actually have more time with my then I do at my current job. Principle 4- People respond to incentives “An incentive is something (such as the prospect of a punishment or a reward) that induces a person to act. Because...
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...dollar amount of assets is likely to have a higher residual income than a corporation with a smaller dollar amount of assets.6. The return on investment can be defined as: c.Total capital invested divided by profit.7. Calculate the return on investment of new equipment in the first year if: Profit = $3,000,000, Invested capital = $45,000,000, Increase in divisional profits = $45,000 Purchase of new machine = $900,000:a.5%. 8. For Echuca Ltd sales are $1,500,000, profit is $90,000, invested capital is $450,000 and the interest rate is 8%. What is the residual income for the year?b.$54000. 9. Tentafield Ltd has an after tax operating income of $2.6 million, assets total $8 million and current liabilities total $400,000. The weighted average cost of capital is 10%. What is the economic value added?, $1,840,000. 10. Given that return on investment measures performance over time, the invested capital would most appropriately be calculated by using:b. Average assets. 1A product may be passed from one subunit to...
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...Access Pricing Principles — Telecommunications July 1997 Preface Part XIC of the Trade Practices Amendment (Telecommunications) Act 1997 introduces a new regime governing access to services in the telecommunications industry. A key component of this regime is the pricing of access which, in part, is to be administered by the Australian Competition and Consumer Commission. The purpose of this document is to outline the approach the Commission will adopt, in the usual case, when considering access pricing issues under Part XIC. A draft of this document was released for public comment in February 1997 and a public forum was held in April 1997. The Commission wishes to thank all parties who made submissions or participated in the public forum. This document reflects the Commission’s views after consideration of all relevant submissions and representations. The Commission also wishes to thank AUSTEL, Treasury, the Department of Communications and the Arts and the Bureau of Transport and Communications Economics for their assistance in preparing this document. The views expressed in this document are those of the Commission. ii Contents Preface ............................................................................................................................ ii Introduction ....................................................................................................................1 Legislative criteria ..................................................
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...goods from India until child labor is eliminated from their suppliers because the company is losing their good reputation and also a significant amount of profits. IKEA should terminate the contract with Rangan even though it was one of the main manufactures because they were the ones that did not follow what the contract said concerning child labor and also because they were the ones that gave IKEA a bad reputation. IKEA will have the opportunity to look for another supplier that produces rugs and at the same quality and for lower prices. This will help IKEA get their good reputation back and help them to continue selling their products for lower prices. Before making the contract with the new supplier, IKEA should ensure that the new supplier will agree to not have child labor in their factories. If this agreement is broken IKEA will end the contract. If IKEA makes these changes I think IKEA will avoid child labor issue with their suppliers. IKEA associated with manufacturers in foreign countries that provided goods for a lower cost to the company. IKEA bought rugs from India at a cheaper price, “To create a better everyday life for the many people,” however IKEA did not know that India was using child labor. They gained success by selling furniture to the public for a lower price. Unfortunately, IKEA was accused for child labor in India. IKEA was told that their producers were using child labor, which means that there were children working in their factories and...
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