I. You run a small firm. Two management consultants are offering you advice. The consultant A says that your firm is losing money on every unit that you produce. To reduce your losses, the consultant recommends that you cut back production. The consultant B says that if your firm sells some additional units, the price will more than cover your increase in costs. In order to reduce losses, the second consultant recommends that you should increase production.

Explain which consultant/s is/are factually true and who is offering the correct advice?

Explain your answers by drawing the relevant diagram/s.

Part II (20 marks) (maximum word limit 1500, tables/graphs additional)

Competitive forces in the market ensure that today’s big firms will not remain market leaders always.

1. Using data from 1990 to 2012 for the Fortune 500 list of the top corporations in the United States, illustrate how companies fall behind when they stand still, but when they innovate they can leap ahead of the competition
2. Investigate the history of any two of today’s top 30 firms (year 2012). How quickly did they rise through the top 500 rankings?

Download data the top 500 for every year from 1990 to 2012 from:

http://money.cnn.com/magazines/fortune/fortune500_archive/full/1955/index.html.

Part III (each question is for 10 marks, answer any one question)

I. Suppose Carrie decides to lease a photocopier and open up a black-and-white photocopying service in her dorm room for use by faculty and students. Her total cost, as a function of the number of copies she produces per month, is given in the table below:

Fill in the missing numbers in the table, assuming that Carrie can charge 5 cents per black-and-white copy.

a. How many copies per month should Carrie sell?

b. If the lease rate on the copier were to increase by $50 per month, how would that impact