...Subject: Managerial Economics and Finance Proffecer name: Pudasaini Assignment Number: 1 Submitted by: Rajendra Sondarva Date: 07/22/2015 TABLE OF CONTENTS INTRODUCTION ................................................................................ 01 ABSTRACT ...................................................................................02 ASSIGNMENT ...................................................................................03 REFERENCE ...................................................................................08 INRODUCTION 1] Description managerial economics relies on microeconomics and industrial organization to analyze business practices and design business strategies 2] Description the difference between price-taking and price-setting firms. ABSTRACT Overview of industrial organisation and micro economics related to managerial economics and difference between price taking and price setting. ASSIGNMENT 1. Why managerial economics relies...
Words: 403 - Pages: 2
...Week 4 Journal Micah Blount Ashford University Managerial Economics BUS 640 Prof. Okolo May 18, 2014 During these past weeks we have discussed many different concepts like, demand elasticity, relevant cost, and contribution analysis, just to name a few. The concept that has really been valuable in helping me understand events or policies is market structures. Looking at the overall market structure with the goal of defining and predicting consumer behavior, marketing managers seek to define market structure to create competitive strategies as part of an overall marketing plan (). We learned that the four basic market structures include, pure competition, monopolistic competition, oligopoly, and monopoly. Pure competition markets are many sellers supplying identical products, such as framers selling milk, eggs, or corn, or individuals selling shares on the Stock Exchange (Douglas, (2012). Monopolistic competition markets are many sellers each supplying differentiated products, such as coffee shop in the central business district of a large city (Douglas, (2012). Oligopoly markets supply relatively few sellers each supply identical or differentiated products, such as automobiles, aircraft, and steel (Douglas, (2012). Monopoly markets have only one seller of a product or service, which has no direct substitutes, such as your local gas or electricity (Douglas, (2012). My understanding of oligopoly helped me understand an article I read this weekend about AT&T...
Words: 392 - Pages: 2
...Strategy Simulation Game Name: University: Course: Section: Instructor: Date: Table of Contents Introduction 2 Pure Monopoly 2 Oligopoly 3 Monopolistic Competition 4 Perfect Competition 4 Relation with Porter's Five Force Model 4 Conclusion 6 References 7 Strategy Simulation Game Introduction This paper explains the use of economics in managerial decision making based on the simulation. It describes decision making process of management in different market structures. The main objective of an organization is to maximize the profits in each type of market structure. Quasar Computers has done extensive research for the development of optical notebook. In the Year 2003, the company launched the first all-optical notebook computer branded as 'Neutron'. Neutron uses energy saving optical technology that established it as the market pioneer (Tata Interactive Systems, n.d.). The following pricing and other decisions are taken for this product in the different market structures. Pure Monopoly Quasar was the sole seller for the new and unique computer technology that established monopoly market structure for it. In the monopoly, profit maximization occurs at the point where marginal cost and marginal revenue equate to each other (Baumol & Blinder, 2005). In this scenario, Quasar objective was to maximize the profits because of its monopolistic situation caused by the patent rights on all-optical technology valid for three years from 2003. Quasar was able to control...
Words: 1550 - Pages: 7
...USA, a business organization manufacturing and selling digital safes. The organization was selected for the analysis, including the assessment of current environmental scan factors which may be relevant to the decision making process. Furthermore, the analysis determines the factors that will have the greatest impact on plant operations and management’s decision to continue or discontinue operations. The results will provide a rational. The evaluation reveals the financial performance of the company using the information provided in the scenario, including consideration for all the key drivers of performances, including company profit or loss for both the short term, and long term. The discussion includes how each factor influences managerial decisions, using the calculation to support the decision. The analysis further recommends how the company can improve its profitability to deliver more value to its stakeholder, giving a brief plan to implement the recommendations. Finally, the research assesses the circumstances in which the company should discontinue operations and how management should react when confronted with these circumstances, including a rational behind the response. Fictitious Business Description The organization in the evaluation, Digisafe USA, Inc., is the manufacturer of digital key and gun safes. The fascinating...
Words: 1809 - Pages: 8
...article analyzes the four main market structures, which are perfect competition, monopolistic competition, oligopoly and monopoly. It provides a detail description of the market, as well as explains the pricing strategy a firm would pursue in that particular market. The article also concludes with a real world example of Visa pricing strategy by examining it oligopoly market structure. Visa has few competitors; however, it must continuously monitor its competitor’s actions in order to remain competitive in today’s market. While, Visa is currently out performing it competitors, they are constantly trying to expand their market. Keywords: market structure, pricing strategy, Potomac Edison Market Structures and Pricing Strategies Introduction Economist can divide today’s market into four different market structures, which are perfect competition, monopolistic competition, oligopoly and pure monopoly. The market structure will help the firm select their pricing strategy. Each market structure has a different pricing strategy the organization can use to achieve profit maximization. Perfect Competition What is perfect competition? Perfect competition is sometimes referred to as pure competition (Officer, 1966). According to Robinson (1934), perfect competition is “a state of affairs in which the demand for the output of an individual seller is perfectly elastic” (p. 104). In order for perfect competition to exist four conditions must be true, which are as follow: 1....
Words: 1857 - Pages: 8
...article analyzes the four main market structures, which are perfect competition, monopolistic competition, oligopoly and monopoly. It provides a detail description of the market, as well as explains the pricing strategy a firm would pursue in that particular market. The article also concludes with a real world example of Visa pricing strategy by examining it oligopoly market structure. Visa has few competitors; however, it must continuously monitor its competitor’s actions in order to remain competitive in today’s market. While, Visa is currently out performing it competitors, they are constantly trying to expand their market. Keywords: market structure, pricing strategy, Potomac Edison Market Structures and Pricing Strategies Introduction Economist can divide today’s market into four different market structures, which are perfect competition, monopolistic competition, oligopoly and pure monopoly. The market structure will help the firm select their pricing strategy. Each market structure has a different pricing strategy the organization can use to achieve profit maximization. Perfect Competition What is perfect competition? Perfect competition is sometimes referred to as pure competition (Officer, 1966). According to Robinson (1934), perfect competition is “a state of affairs in which the demand for the output of an individual seller is perfectly elastic” (p. 104). In order for perfect competition to exist four conditions must be true, which are as follow: 1....
Words: 1857 - Pages: 8
...Project Part 3 Betsy Whitfield ITT Tech Online MG514 – Managerial Economics Professor Michael Thirtle April 27, 2013 | | Project Part 3 The fundamental concepts of managerial economics are to decide if a production plant is needed. What will be produced, where the plant will be located, and how many employees do we need. I chose a plastic plant. One can either buy an existing manufacturing plant (Starting a Plastic Manufacturing Plant, 2013). There are a lot of plastic manufacturing plants that are fully furnished and offered for sale in various parts of the world (Starting a Plastic Manufacturing Plant, 2013). They cater to a wide variety of plastic products (Starting a Plastic Manufacturing Plant, 2013). Once you are knowledgeable of your desired product, the scientific and technical way to manufacture it and the type of business venture you are planning, as well as the location of your plant, you can start looking into the license and permit requirements of the government (Starting a Plastic Manufacturing Plant, 2013). Any transaction has two dimensions, namely a demand and a supply (http://www.buzzle.com/, 2013). In any market, the number of units of a commodity that a consumer has the will and ability to pay for becomes the demand for that particular commodity in the market and any producer that has the will and ability to produce those units, becomes the supply (http://www.buzzle.com/, 2013). It is not necessary...
Words: 1820 - Pages: 8
...2006; p.2). In this industry, as network effects are realized, the average cost may decline over a long period. The high initial capital costs will be recovered over a period of time. (Theron & Boshoff, 2006; p.2) In this essay, these three forms of telecommunications will be discussed in depth, in accordance to their market structures, their nature of competition, their pricing and lastly their strategic decision making. The first part of the telecommunication industry is fixed landlines. The fixed landline in South Africa is Telkom. Telkom is seen as a pure monopolist business, because their market structure only exists of a single seller, which means the market for their goods and services is dominated by themselves. The demand for their goods and services in the entire markets is the demand for the firms individual output. In this case, Telkom is the firm supplying fixed landline services to all the consumers of South Africa. Telkom has no competitors or close substitutes, and is seen as the sole provider in the whole country. Telkom has a blocked entry condition towards any competitors thus proving that Telkom is seen as a pure monopoly. According to Van Gorp, Telkom was able to set high prices which affected the South African mobile operators, the Internet providers and also other African countries because their traffic is routed via South Africa, due to alternative routes. (Van...
Words: 2763 - Pages: 12
...for themselves. In this busy schedule, the introduction of low calorie microwavable food has lives of people much more easier. These products are easily consumable and hence have become very popular. As discussed in assignment 1, the market structure (or selling environment) was perfectly competitive. In a perfectly competitive market there are a large number of buyers and sellers. The products sold in this market are perfectly homogeneous. Examples of perfect competition are vegetable market, market for cereals etc. In a real world situation, there are many sellers of low calorie microwavable food. If we observe the demand side, we can also find a large number of buyers in the market. With large number of buyers and sellers, if we examine the nature of the product, then we can see that the products are almost homogeneous. The main characteristics of perfect competition are: i. Many buyers and sellers ii. Free entry and exit iii. Information is perfect iv. Homogeneous product Now, firms under perfect competition have no market power and hence cannot affect the market price. They are bound to sell at the ongoing market price. But recently, it has been observed that the characteristics of the market are changing. Since the tastes of people are different, there is a lot of scope for product differentiation in this market. The sellers are also taking the advantage of this taste differentiation and are differentiating their product. Thus the sellers of the microwavable food...
Words: 1422 - Pages: 6
...and consumers. Furthermore, given the transition from a monopolistically competitive firm to a monopoly, I will explain the changes with regard to prices and output in both of these market structures. Lastly, an explanation about which market structure is more beneficial for Wonks to operate in, and if this will be the same market structure that will benefit consumers. In any market transaction between a seller and a buyer, the price of the good or service is determined by supply and demand in a market, (Asmundson, 2010). Supply and demand are in turn determined by technology and the conditions under which people operate. Economists have formulated models to explain various types of markets. The most fundamental is perfect competition, in which there are large numbers of identical suppliers and demanders of the same product, buyers and sellers can find one another at no cost, and no barriers prevent new suppliers from entering the market. Prices can change for many reason Final Paper 3 The relationship between the supply and demand for a good (and service) and changes in price is called elasticity. In monopoly situations, there usually is a barrier natural or legal to potential...
Words: 1925 - Pages: 8
...NATIONAL OPEN UNIVERSITY OF NIGERIA COURSE CODE : BHM 303 COURSE TITLE: MANAGERIAL ECONOMICS 1 MANAGERIAL ECONOMICS (THE COURSE GUIDE) THE NEED Managerial Economics as a course required for effective resource management was put in place due to the following developments in the global business environment: (a) Growing complexity of business decision-making processes. (b) Increasing need for the use of economic logic, concept, theories, and tools of economic analysis in the process of decision-making. (c) Rapid increases in the demand for professionally trained managerial manpower. These developments have made it necessary that every manager aspiring for good leadership and achievement of organizational objectives be equipped with relevant economic principles and applications. Unfortunately, a gap has been observed in this respect among today’s managers. It is therefore the aim of this course to bridge such gap. THE COURSE OBJECTIVES On completion of the requirements of this course, students and managers alike will be expected to: 1. Understand the relative importance of Managerial Economics; 2. Know how the application of the principles of managerial economics can aid in the achievement of business objectives; 3. Understand the modern managerial decision rules and optimization techniques; 4. Be equipped with tools necessary in the analysis of consumer behaviours, as well as in forecasting product demand; 5. Be equipped with the tools for analyzing production and costs;...
Words: 40300 - Pages: 162
...Table of Contents Managerial Economics: Bridging the gap between economic theory and business practice Introduction 3 Definition 3 Economic Theory Vs. Managerial Theory 4 Decision-making 6 Scope of Managerial Economics 6 Positive versus Normative Economics 7 Positive Economics 7 Normative Economics 7 Examples Demonstrating How Managerial Economics Translates Economic Theory into Business Practice 9 Demand Analysis and Forecasting 9 Cost and Production Analysis 10 Inventory Management 10 Advertising 11 Pricing Decision, Policies and Practices 11 Profit Management 11 Capital Management 12 Responsibilities of a Managerial Economist 13 Conclusion 15 Gadgets International: A Case Study Nature of the Case Study 16 About Gadgets International (GI) 16 Market/Industry Structure 17 Firm’s Objectives 19 Using Economic Theory to Attain Gadgets International’s Organizational Goals & Objectives 19 Optimal Output Level & Pricing Strategy 19 Inputs and Costs 22 Accommodating Change 24 Promoting Growth 25 Conclusion 26 Managerial Economics Bridging the gap between economic theory and business practice Introduction The science of Managerial Economics has emerged only recently. With the growing variability and unpredictability of the business environment, business managers have become increasingly concerned with finding rational and ways of adjusting to an exploiting environmental change. Managerial economics generally refers to the integration...
Words: 5670 - Pages: 23
... Managerial economics refers to the application of economic theory and the tools of analysis of decision science to examine how an organization can achieve it aims or objectives most efficiently. Importance of managerial economics Managerial Decision Problems Economic theory Microeconomics Macroeconomics Decision Sciences Mathematical Economics Econometrics MANAGERIAL ECONOMICS Application of economic theory and decision science tools to solve managerial decision problems OPTIMAL SOLUTIONS TO MANAGERIAL DECISION PROBLEMS Managerial Decision Problems Economic theory Microeconomics Macroeconomics Decision Sciences Mathematical Economics Econometrics MANAGERIAL ECONOMICS Application of economic theory and decision science tools to solve managerial decision problems OPTIMAL SOLUTIONS TO MANAGERIAL DECISION PROBLEMS Managerial enables the use of economic logic and principles to aid management decision-making. Managers are decision-makers and economics should be relevant to give practical guidance in arriving at right decisions. Every manager has to take important decisions about using his limited resources like land, capital, labour, finance etc. to get the maximum returns, therefore, managerial economics, concentrates on those practical aspects of micro-economics which help in decision-making. Managerial economics focuses on the most profitable use of scarce resources rather than on the achievement of equilibrium prices and quantities as pure theory...
Words: 3719 - Pages: 15
...Business research, is a systematic inquiry that provides information to guide managerial decisions. More specifically, it is a process of planning, acquiring, analyzing, and disseminating relevant data, information, and insights to decision makers in ways that mobilize the organization to take appropriate actions that, in turn, maximize performance return on investment (ROI). At its most simplistic, when we measure ROI, we calculate the financial return for all expenditures. Increasingly, organizational managers want to know what strategies and tactics capture the highest return. management dilemma, the problem or opportunity that requires a management decision. Several factors should stimulate your interest in studying research methods: 1 1. Information overload. Although the Internet and its search engines present extensive amounts of information, the information’s quality and credibility must be continuously evaluated. The ubiquitous access to information has brought about the development of knowledge communities and the need for organizations to leverage this knowledge universe for innovation—or risk merely drowning in data. 2. Technological connectivity. Individuals, public-sector organizations, and businesses are adapting to changes in work patterns (real-time and global), changes in the formation of relationships and communities, and the realization that geography is no longer a primary constraint. With the increased acceptance and use of mobile technology, information...
Words: 1445 - Pages: 6
...the market structures of monopoly, oligopoly, monopolistic competition, and perfect competition. This simulation and the real-life scenarios detailed within, provide insight and understanding to the intricate decisions that are made in each type of market structure and the impact of those decisions. In the Quasar simulation, the C.E.O. utilized pricing as tool for optimizing profits, and with the input from the board of advisors decided to allocate funds to advertising, technology, and other ventures. (University of Phoenix, 2008) Through the course of this paper, a solution will be created using strategic variables, in order to sustain the economic profits that the firm can earn. This paper will also look to identify pricing and non-pricing strategies that will further facilitate the goal of maintaining economic profits. Finally, this paper will ascertain what kind of innovations will best prolong Quasar’s distinctiveness. In 2003, Quasar launched the world’s first all optical notebook computer branded Neutron. Because of Neutron’s processor, memory use and high-speed optical conductors, Neutron boasts approximately 5 times the speed of existing microchip-based computers. Neutron employs high energy saving technology with rechargeable batteries that last up to 3 days and due to the patented technology, Quasar and Neutron have a monopoly on this product line for the next 3 years. According to McConnell and Brue a pure monopoly exists when a single firm is the sole producer of...
Words: 1167 - Pages: 5
