...Given the business situation of Mrs. Acres Homemade Pies (p.30) and using the economic concepts of supply and demand, explain: Discuss what you think will happen to the supply, demand, and price of the product in the short-term: Upon reviewing Mrs. Acres’ situation on page 30, there is a limited amount of information given. However, with the information we do know, Mrs. Acres can currently produce 8,000 pies a month with a full-time staff of 4 employees. In this circumstance, the quantity Mrs. Acres is able (willing) to supply and the current price of $4.50 that the consumer is willing to spend is known as the equilibrium price. In the short-term, given the above facts, with there being a max that can be produced, there will be no effect on supply. Mrs. Acres cannot produce anymore than the 8,000 pies as stated above. At the maximum number of pies that can be made, supply is limited and does not change. Since the current supply of pies is constant, demand will most likely increase. An increase in demand will raise both the equilibrium price and equilibrium quantity, however will not have an effect on the actual price of the pies. 1. Discuss what you think will happen to the supply, demand, and price of the product in the long-term: In the long-term, Mrs. Acres may decide to expand both her staff and facility. If this is done she can produce more than the 8,000 pies. This will increase the supply she can produce, causing a drop in the equilibrium...
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...Mrs. Acres / Strayer 1 Economics of Mrs. Acres Pies Monopolistic Competition Bus 508 Mrs. Acres / Strayer 2 Economics of Mrs. Acres Pies / Strayer University – Monopolistic Competition Introduction The first part of this paper will discuss both the short and long term effects of supply and demand as well as pricing, on Mrs. Acres Homemade Pies. The second part will review the factors of production for Strayer University which operates in an industry that is classified as monopolistic. Mrs. Acres Homemade Pies holds a coveted position in today’s economic climate. It is experiencing tremendous sales growth and has the opportunity to create additional jobs. The company is facing a number of difficult decisions as it tries to meet the high demand for its product. Short Term Outlook The first scenario will look at the short term effects on her business if she decides to maintain current production and raise prices. It is assumed all other things are equal. According to the law of demand, there is an inverse relationship between a product’s price and the quantity demanded of that product (McConnell; Brue, 2009). It is initially appealing for her to raise the...
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...10y Price of goods: Price of petrol: Px = $1.50 per litre Price of composite good: Py = $1 per unit Qn. 1 To find Sally’s optimum consumption basket, we need to apply the constrained optimisation process. * Using the tangency condition: MUxMUy=PxPy 110/y = 1.51 y10=1.51 y=15 y=225 * Using the budget constraint: Px(x) + Py(y) = I $1.50(x) + $1(225) = $324 1.5x = 324 – 225 1.5x = 99 X = 66 Therefore, Sally’s optimum consumption basket: x = 66 litres of petrol y = 225 units of composite goods * Sub the values x = 66 and y = 225 into the utility function: Ux,y=x+20y U66,225=66+20225 U66,225=66+300 U66,225=366 At optimum consumption basket x = 66 and y = 225, Sally’s will receive a utility level of 366. Qn. 2 and 4 Composite Goods (y) Composite Goods (y) BL1 BL1 B B 324 (I1/Py1) 324 (I1/Py1) X=66 X=66 Y=225 Y=225 216 (I1/Px1) 216 (I1/Px1) A A U1 U1 U2 U2 BL2 BL2 0 0 162 (I1/Px2) 162 (I1/Px2) Petrol (x) Petrol (x) From Qn. 1: Pt. A = Optimum consumption basket (x = 66, y = 225), where U1 is tangent to BL1 Indifference curve U1: U(66,225) = 366 BL1 = Budget line where I=$324, Px = $1.50 and Py = $1 From Qn. 3: Pt. B = New optimum consumption basket (x = 0, y = 324), where U2 is tangent to BL2 Indifference curve U2: U(0,324) = 360 BL2 = Budget line where I = $324, Px = $2 and Py = $1 Qn. 3 * Holding income and all other prices constant, the increase in price of...
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...ECON 3400H Managerial Economics Instructor: Sharif F. Khan Department of Economics Trent University Fall 2012 Suggested Solutions to Assignment 1 (Optional) Read each part of the question very carefully. Show all the steps of your calculations to get full marks. 1. End-of-chapter “Problems” # 2 of Chapter 4 of the textbook – Salvatore (7e). 2. End-of-chapter “Problems” # 3 of Chapter 4 of the textbook – Salvatore (7e). 3. End-of-chapter “Problems” # 4 of Chapter 4 of the textbook – Salvatore (7e). 4. End-of-chapter “Problems” # 6 of Chapter 4 of the textbook – Salvatore (7e). 5. End-of-chapter “Problems” # 9 of Chapter 4 of the textbook – Salvatore (7e). 6. End-of-chapter “Problems” # 10 of Chapter 4 of the textbook – Salvatore (7e). 7. End-of-chapter “Problems” # 12 of Chapter 4 of the textbook – Salvatore (7e). 8. End-of-chapter “Problems” # 13 of Chapter 4 of the textbook – Salvatore (7e). 9. End-of-chapter “Problems” # 15 of Chapter 4 of the textbook – Salvatore (7e). 10. End-of-chapter “Appendix Problems” # 1 of Appendix to Chapter 4 of the textbook – Salvatore (7e). 11. End-of-chapter “Appendix Problems” # 2 of Appendix to Chapter 4 of the textbook – Salvatore (7e). ANSWERS TO PROBLEMS 1. PC (the price of Chevrolets) is expected to be inversely related to QC (the quantity demand of Chevrolets) because of the law of demand. N (the size of the population) is expected to be directly related to QC because a larger population usually means more purchases. I (disposable...
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...To answer this question we have to consider many factors such as if the people who need them are receiving them, what the side effects are like, and if the antidepressants being prescribed are working effectively. Antidepressants are not overprescribed. They have worked wonders for many people and have allowed them to live again. One of the most important things to know about antidepressants is whether or not they work. In many cases of severe depression antidepressants have often made a big difference in patients’ recovery processes(Hall-Flavin, Daniel K.). Antidepressants...
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...include in the analysis. * Collect data on independent and dependent variables. * Estimate regression line. * Examine results. This includes test of statistical significance and analysis of residuals. Regression Analysis Regression analysis is a statistical technique that examines the relation of a dependent variable to specified independent variables. The easiest form of regression analysis involves finding and understanding the straight-line relationship to illustrate the variation in the dependent variable, (Y), relies on the variation in the independent variable, (X). For this analysis, the (X) values consist of price, competitors’ price, average income, and market population. The (Y) value represented by the number of pies sold. The regression equation can be stated as: Y = a + bX The result of a regression analysis is a...
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...uncharacteristic high target of 8.44 ounces. * He is expending extra 0.22 ounce of macaroni and cheese in each pie. * Cortland facility produced 60,000 dozen eight-ounce frozen macaroni and cheese pies each month on a line staffed with 25 workers, each whom made about $6 an hour. * The line operated at a speed of 1,000 dozen pies every 20 minutes. * Pies sold at a wholesale price of $4.50 per dozen, $1.50 above the $3 standard cost per dozen. Fill Targets * Fill targets were always set above the amount stated on the package. * Industry practice was to set targets at one standard deviation above the package amount so that about 85% of all packages would be in compliance. * During energy crisis, the effect on frozen macaroni and cheese was to cause a softening of the product and a subsequent weight loss due to dehydration. * Inspectors from the Bureau of Weights and Measures of New York City levied fines of up $15 for each eight-ounce package of frozen macaroni and cheese found to be substantially underweight. * Amore quickly raised the target to 8.44 ounces, a full two standard deviations above the package weight. Weight-Control System * For Amore’s macaroni and cheese pie, the FDA had approved a weight-control system that required a sample of five pies be taken every 20 minutes. * The technician cost the company close to $12 an hour with benefits. * The piece were taken from the line after being cartooned and just prior to being cased and...
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...Chapter 4: Answers to Questions and Problems 1. a. The market rate of substitution is Px Py 10 40 0.25 . b. See Figure 4-1. c. Increasing income to $800 (by $400) expands the budget set, as shown in Figure 4-1. Since the slope is unchanged, so is the market rate of substitution. Budget Set Y 25 20 15 10 5 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 Increase in income X Figure 4-1 Managerial Economics and Business Strategy, 5e Page 1 2. a. The consumer’s budget line is $250 $5 X $10Y . Rearranging terms and solving for Y results in Y 25 0.5 X . b. See in Figure 4-2. c. When the price of X increases to $10, the budget line becomes $250 $10 X $10Y , which is equivalent to Y 25 X (after rearranging and simplifying terms). This is shown in Figure 4-2. The market rate of substitution Px P 5 1 10 changes from to x 1. Py Py 10 2 10 Budget Set Y 30 25 20 15 10 5 0 0 5 10 15 20 25 30 35 40 45 50 X Figure 4-2 3. a. Since the slope of the line through point A is 20 20 1 and the price of good X is $5, it follows that Py 5. b. If the consumer spends all her income on good X she can purchase 20 units. Since these units cost $5 each, her income must be $100. c. At point A, the consumer spends ($5)(10) = $50 on good Y, which means that the remaining $100 - $50 = $50 is being spent on good X. Since good X costs $5 per unit, point A corresponds to 10 units of good X. d. The price of good Y decreased to $2.50. The consumer achieves a higher level of satisfaction at point B. 4...
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...financial measures (such as operating income, return on investment, and economic value added) are not perfect by themselves, they claim that financial measures at least are well understood and provide clear, unambiguous, and objective goals on which all organizational participants can focus. Such people feel that multiple measures—some financial and some non-financial—are confusing and lead to ambiguous, often conflicting, signals about what the organization values. PY We disagree. Imagine entering the cockpit of a jet airplane and observing that there is only a single instrument. How would you feel about flying on that plane after the following discussion with the pilot: Reprinted by permission of Harvard Business School Press. Adapted from The Balanced Scorecard by Robert S. Kaplan and David P. Norton. Copyright ©1996 by the President and Fellows of Harvard College; all rights reserved. CALIFORNIA MANAGEMENT REVIEW VOL. 39, NO. 1 FALL 1996 53 Measures Targets Initiatives PY CALIFORNIA MANAGEMENT REVIEW VOL. 39, NO. 1 “To achieve our vision, how will we sustain our ability to change and improve?” CO Objectives CUSTOMER FALL 1996...
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...6&7 – Variance analysis Variance analysis: Reason for variance: 1.Price/rate/spending variances: Standard is out of date; Standard set without due care; Efficient or inefficient buying (e.g., discounts); Buying different quality material from standard; Buying materials from a non-usual source due to urgency; Utilising different labour from standard; Price changes due to economic conditions; scarcity of supplies; Choosing to incur additional discretionary fixed costs; More (or less) overtime hours used than budgeted. 2. Efficiency/usage/quantity variances: Standard is out of date, set without due care; Inefficient use of material/labour, deliberate or otherwise; Poor supervision/equipment/maintenance.Changes in the production process.Learning period associated with process changes.Efficiencies from different quality of material or labour from standard; More efficient manufacturing than expected in the standard; Materials not being available causing idle time; Poor production scheduling; Industrial disputes; Materials not properly recorded in and out of storeroom. 3.Fixed overhead volume: Standard is out of date; Standard set without due care, i.e. poor estimation of denominator activity; Any occurrence causing the firm to produce a number of units different from budgeted production. Standard costing is an acceptable method of valuing inventories under AASB102 provided the following requirements satisfied: results approximate actual ; normal levels of materials, labour, efficiency...
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...Topic: “Elasticity of Demand and Managerial Decision Making” The demand of a commodity depends on the size of the total market or industry demand for the commodity which in turn is the sum of demands for the commodity of the individual consumers in the market. The demand for a commodity arises from the consumers’ willingness and ability to purchase the commodity. Consumer Demand Theory postulates that the quantity demanded of a commodity is a function of the price of the commodity, the consumers’ income, the price of the complementary and substitute commodities and the taste of the consumer. It is also expressed as: Qdx=f(Px, I, Py, T) Where Qdx = Quantity demanded of the commodity X by an individual per time period Px = Price per unity of commodity Y I = Consumer income Py = Price of substitute or complementary commodity T = Consumer taste When the firm increases the price of a commodity, sales generally decline. A manager expects an inverse relationship between the quantity demanded of a commodity and its price. On the other hand, when a consumer’s income rises, he/ she usually purchases more of most commodities, known as normal goods. There are some goods and services, however, which the consumer purchases less as income increases, which are termed as inferior goods. The inverse relationship between the price and the quantity demanded of the commodity per time period is the individual’s demand schedule for the commodity, and the plot of data gives...
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...Producer-Producer Rivalry: • Firms with best quality and lower prices earn customer 5) Recognize the Time Value Of Money • Present value Analysis: The amount that would have to be invested today at prevailing Interest rate to generate given future Value. • Present Value Formula: PV= FV/(1+i)^n • Present Value Stream: (FV_t)/(1+i)^t • Net Present Value: Future Value – Cost • Perpetuity: (CF/i) 6) Use Marginal Analysis • Most Important Managerial Tool • N(Q)= B(Q) – C(Q) • Marginal Value Curves are the Slopes of the Total Value Curves Chapter 2 • Demand: As price goes up demand goes down; Vice-Versa • Changes in Quantity Demand: When price is the lead to a change in Quantity 5 Factors that Effect Demand A) Income: Effect how much consumers will buy at any price. • Normal good: Increase in income leads to increase in Demand for a good. (Name Brand Hot Dog) • Inferior Good: Increase in income leads to decrease in demand for a good. (Generic Brand Hot Dog) B) Price of...
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...Section 1: Introduction Australian Meat Pies Australian Meat Pies are the hand sized small pies with fluky pastry on top and it can be considered one of the high demanded fast foods that are consumed by the locals. Frequently consumed in sports events and very good combination with chilled beer. According to Asia Travel Guides (2014) local people likes theses meat pies so well that it is already started to count as national dish of Australia. We can compare Aussie pies as a fast food eaten in their own sport events with American hot dogs whish is consumed during the football games. Business Plan Founders of the company Anna Amphlett and Andrew Ferris came up with the idea to start producing hot pies in US, Seattle after their very first visit to Australia. To start such a business with the shortage of financial resources Amphlett together with Ferris planed to take loan from the Bank that has very good contacts with Ferris who was their prior employee for while. For the loan giving there are some required documents that Bank needs to complete Business Plan, Cash Flow, Balance Sheet and Income statement. One of the main intentions of preparing a business plan is a initial move of commencing a business, to locate the answer the fundamental and investigative questions of what amount of capital it will be required to start the plan (Berry, 2011). Section 2: Financial Analyses Success Factors of Aussie Business There are 3 very important success indicators needs to...
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...Mrs. Acres Homemade Pies Business 508 Professor Jack McCaffery Summer 2010 Rosie Wright BUS508 Assignment #1 1. Choose your company or service for your business proposal. It is not to be a franchise (McDonald’s). I would like to complete my business proposal on the company I work for; the name of the company is “Campus Crest Communities”. Campus Crest builds student housing across the United States. Their corporate office is located in South Park, they have 29 properties. 2. Analyze the situations below, complete the actions, and prepare a 3-4 page report with your conclusions: o Given the business situation of Mrs. Acres Homemade Pies (p. 30) and using the economic concepts of supply and demand, explain 1. Discuss what you think will happen to the supply, demand, and price of the product in the short-term; 2. Discuss what you think will happen to supply, demand, and price of the product in the long-term. 3. Explain why you think supply, demand, or equilibrium price will be different, if at all, in the short-term and the long-term. Mrs. Acres Homemade Pies Discuss what you think will happen to the supply, demand and price of the product in the short-term Mrs. Acre’s homemade pies are very successfully within her local supermarkets and a few family restaurants. Although the company’s success is driven by the quality of the product and the incentives provided for her employees. It’s very important that we pay attention...
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...ASSIGNMENT 1: OPERATIONS DECISION 2 The company that I am consulting is Simple Simon’s Pecan Pie Factory. Simple Simon’s has been producing pecan pies for thirty years and is an established and well-recognized competitor in the gourmet pie market. The company has two manufacturing plants in Tifton, GA and Charleston, SC, and ships its pies all over the world. Recently, I was contacted by the president of the company, Simon Fair, to make recommendations on how to turn around the company’s floundering operations. Over the last three years, Simple Simon has seen its market share fall and its revenue decline 15% each year. There have been several competitors that have entered the market within the last five years that have taken market share away from Simple Simon’s. With the current economic environment, the company faces some challenging decisions. Currently, the company employs 100 workers and produces 6000 pies per month. Each of the two factories is running at only 40% capacity, and the company has had to lay off 25 workers in the last 6 months. The firm’s fixed costs are high enough that they have caused total cost to currently exceed total revenue. The company must make a decision on whether to continue or cease operations. The first step in analyzing Simple Simon’s financial situation is to do an environmental scan of their operations. An environmental scan refers to patterns, trends, and relationships within an organization’s internal and external environment...
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