...Homework #1 1. Suppose you hire a real estate agent and tell him to sell your house to the highest bidder. You pay the real estate agent a flat fee of $50,000 when the house is sold. You learn that, unfortunately, the agent sells the house to the first bidder at a low price. a. What is this type of problem called? b. What is one way to change the real estate agent’s incentive so he does sell to the highest bidder, instead of to the first one? a. This type of problem is known as an agency problem b. One way to change the real estate agent’s incentive so that he is motivated to find the highest bidder is instead of paying him a flat fee of $50,000 you offer him a commission that pays him a percentage of the house’s sales price. This way he will try to find the highest bidder so he can maximize the amount of money he gets and you can get the best possible price for your house. 2. Suppose you own one share of stock in ABC Inc. and one share of stock in XYZ Co. You can sell both shares at $100, but it will take you much longer to find a buyer willing to pay $100 for XYZ compared to ABC. a. Which stock is more liquid? b. If you had to sell both stocks today, which one would sell for a higher price? a. The stock for ABC Inc. is more liquid because it can be sold more quickly with limited price impact. b. The stock for ABC Inc. would sell for a higher price because it is the most liquid out of the two. 3. National Bank pays 3% simple interest on its...
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...segments in the market. Explain where you decided to cut the dendogram and why? When we ran the segmentation a dendogram was created and this provided us with information regarding the amount of lost information when we clustered the data together. The top of the dendogram is where all clusters are grouped together and most information is lost. The bottom of the dendogram is where all the clusters are not grouped together and the information is most similar. According to the first dendogram that was created, we determined that the optimal number of segments is four. This is the optimal number of segments because at this point the first significant jump occurs from .55 to .89. Four clusters is the best approach because you lose information from 4-3 and when going from 4-5 the information is too scattered and becomes irrelevant and unfocused. This is why 4 clusters is the best approach. Q2. Use the number of the segments you determined in Q1 and re-run “Segmentation” from the Segmentation and Classification tool (enable the Discrimination). This time, in the Dendogram sheet, instead of 9 segments you should see the specific number of segments you determined. What are the key segments of import beer drinkers? How can you label them? Explain the profile of each segment according to the segmentation (not discrimination) variables used in the analysis. After determining that four segments would be the best choice for Kirin USA we are left with four clusters. The first cluster we...
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...wonder the same question, why do gas prices fluctuate? There are millions of articles, blogs, news reports and people complaining throughout the world about gas prices. People really want to know the answer to this question and unfortunately there is no clear cut answer. After my research one thing that seems constant is that the gas prices are rising but the amount of increase is not consistent throughout the country. Even within the same state the gas prices varies. I leave out my house and the gas is $4.29 per gallon. I drive 4 miles to a suburb and the gas is $3.83 per gallon. I drive across to the neighboring state and the gas prices are $3.69 per gallon. I live in the city of Chicago, IL and every year the city is voted to have the highest gas prices in the country. When I saw the first question it was a no brainer because I really want to know why our gas prices top the national average. I am going to discuss the factors that affect the prices of gas around the country and focus on the city of Chicago. There is no one factor that contributes to the rise of gas prices. The fluctuation of gas prices can be contributed to a combination of factors. Some of the factors that have been seen throughout my research are the price of crude oil, increase in demand, distribution network breaks, refinery capacity, and taxes. The Oil Producing and Exporting Countries (OPEC) determine how much oil to produce and distribute. OPEC attempts to stabilize the prices of crude oil but the supply...
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...like to compare two different HDD by Western Digital. Western Digital is one of the largest computer hard disk drive manufacturers in the world. The way WD designed their website is intuitive so it’s easier for the user to comprehend, and decide which hard drive will best fit the customer needs. They say “Our colors give you the power”, by comparing each individual HDD we can easily decide which hard disk drive should be purchased according to customers’ needs. Refer to Figure 1 to compare between various HDDs that Western Digital offers. The two HDDs that I would like to focus on are the WD Green- Cool, quiet, eco-friendly, and WD Black- Maximum performance for power computing. WD Green Desktop Hard Drive WD Green Desktop Hard Drives are designed to run very cool and quiet when in operation, in other words eco- friendly, which are beneficial for energy efficiency. WD Green 1TB Desktop Hard Drive: 3.5-inch, SATA 6 GB/s, IntelliPower, 64MB Cache WD10EZRX. This HDD is 1TB in capacity, 3.5 inches of size of the drive, SATA 6GB/s which can transfer up to 6GB if data per second. For example 6GB/s should load up twice as fast than 3GB/s. WD Caviar Green hard drives reduce power consumption by up to 40% and offer best-in-class acoustics and operation temperature. The Revolutions Per Minute, also known as RPM are listed as IntelliPower in this HDD which can be up to...
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...lower price-elasticity of demand. In each of your answers, point out why you consider that level of elasticity. • Cds • Glasses • Home furniture • T-shirts • Business furniture • Cars • Air travel • Sodas • Books • Bank services • Cod • Rice • Aspirin • Gas • Drinking water I think that the most price-elasticity product of demand is the CDs because they have many substitutes and there is in case of Peru a lot of informal markets and in case of a increase in the originals CDs the people might prefer to buy the copy of the CD in the informal market. 3. Choose one of the goods above. Consider yourself to be in charge to change the price of that good. What would you do and why? In this case, we are the suppliers of a gas station. We would increase the price of the Gas taking the advantage that this good is a low price-elasticity of demand one. We should consider a competitive price and that way increase our income without harming the user’s economy. ----------------------- Consumer maximizing behavior Consumption Possibilities -Constraint on consumption possibilities of the budget line which elements are the Income, Price and Quantity. The Household’s Consumption Choice The household chooses the best affordable point -The best affordable point has two properties. It is On the budget line On the highest attainable indifference curve -Following figures show the best affordable...
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...Entrepreneurial Innovation or Corporate Advantage? The competitive advantages of Wegmans & how we can apply private innovation to public returns on investment. By Garrett Macdonald, Corporate Finance Major at St. John Fisher College - 2014 Why is Wegmans ranked as #1 by consumers? 1. Their Employee Satisfaction – The “biggies” a) Wegmans has a program called “Competitive Pay” that grants employees the benefit of often being the highest paid employees in their industry. This enables them to attract (in most cases) above average employees compared to their industry competitors! b) Wegmans uses vertical integration. They control almost every aspect of their business (don’t outsource normally) including their own; marketing, legal, engineering (design & building of stores and in-store fixtures), event services, store maintenance, & more. c) Wegmans gives generous scholarships for part time (min. hr. requirement) & full-time employees, including a double scholarship opportunity for full-time employee’s parents. d) Wegmans allows its employees the opportunity to participate in firm-specific investments whereby senior members of staff can exploit geographical trends in food, goods, & services to better serve their customers while being rewarded for their outstanding performance. This builds internal innovation between stores and thus between competitors. e) Internal promotion – often overlooked in a company’s policies, but can often speak to the company’s ability to promote...
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...Why does the majority decide to buy iPhones, when other smartphones supplied contain better features even at lower prices? This insight brief seeks to explain some of the reasons why the majority decides to buy iPhones. By pointing out some of the biases usually incurred in consumers’ decision-making process, this might help consumers to identify and be aware of the biases they make through this process. Especially, the biases occurred in the state of information search. Thereby, hopefully, this insight brief might encourage better decision making. The internet contains limitless access to information. This fact makes the consumers capable of finding websites comparing technological devices, such as smartphones, easily and effortless. Therefore, consumers should be able to make the best decision regarding their purchase of smartphones. In spite of this, consumers do not always make the best decisions. Often consumers choose to purchase iPhones mainly because of some biases occurred when processing and acquiring information. According to the traditional model of consumer decision making, consumers reach the state of information search after they have recognized a problem (Kardes et.al. 2011). In the state of information search consumers often choose a cluster of brands to consider, called a consideration set. The consideration set is often evoked from memory, i.e. internal search, instead of through external information search, because information derived from memory is often...
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...9 I. CASE SUMMARY Chia-yi Yu, the new controller of Zauner ornaments, decided to research Zauner’s current costing methods. She approached her senior analyst, Yung Chen, to prepare an analysis of unit-product costs for each of Zauner’s products, namely small glass ball ornaments, large glass ball ornaments, and specialty glass ball ornaments. Using information from the sales department, Chen calculated the cost per box using traditional volume-based costing system and as a result, small glass ornaments’ cost is more than twice higher than its selling price, which means the company is losing money. David Metz, the directory of Operations, analyzed the results and suggested to redo the calculations and to try allocating overhead to each product based upon direct materials and direct labor. Chen calculated the cost per box using Metz’ suggested approach and found that product costs are below current sales price. Yet, Chia-Yu was not fully convinced of this approach and realized that activity-based costing (ABC) system might reflect Zauner’s product costs more accurately and serve as a basis for better product-pricing decisions. II. POINT OF VIEW The analysis of Zauner Ornaments’ cost allocation per product will be taken from Chia-yi Yu’s perspective, being the new controller, who aims to review and provide more accurate costs and improve product-pricing decisions. III. STATEMENT OF THE PROBLEM The problem is to choose among traditional volume-based costing...
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...Md. Arafater Rahman Bhuiyan Assistant Professor Department of business studies Bangladesh University of Business & Technology Subject: Letter of Transmittal Dear Sir, With due respect we, the undersigned students of BBA 28 intake, section 07 of a group have Case study on “Why did global food price rise” under the course: International Business. This case study has enabled us to gain how to increase global food price rise. So it becomes as an extremely challenging and interesting experience. Thank you for your supportive consideration for formulating an idea. Without your Inspiring this case study would have been an incomplete one. Lastly, I would be thankful once again if you please give your judicious advice on effort. Yours’ sincerely, On behalf of my group Md. Mahmud Hasan ID No- 11123101283 Department of Business Studies Acknowledgement Every case study big or small whatever, is successful largely due to dedicated people who have always given their valuable advice. I sincerely appreciate the support and guidance of all those people who help us to complete this case study. I am Md. Mahmud Hasan. Extreamly grateful on behalf of my group to my course teacher Md. Arafater Rahman Bhuiyan who gave a case study task to complete with good direction. And also, grateful unknown economic online blogger who wrote articles on his blog & we got some important information. I also grateful to my group...
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...probably Government Intervention. Government Intervention occurs when a governing body decides to manipulate a market, usually to prevent a market failure. In this case the market failure could be seen to be poverty and inequality as there is evidence in the text that, due to rising food prices, more and more people are unable to afford food, one of the basic needs for survival. Clearly, as I am referring back to the text, this is in context. Next up I need an explained diagram. I need this diagram to explain why there is a problem in this market, so I will show that as more crops are being demanded for biofuels, this leaves less available for food. It is clear that as the amount of fossil fuels reduces, but the world population increases, there is more of a demand for energy sources. This is shown in diagram 1: Diagram 1: From this diagram we can see that as the demand for crops such as sugar and wheat (making sure I’m sticking to this particular question and not going off on a tangent) for biofuel production increases, this causes an extension of supply, pushing the price up to P2. This means there is now further incentive for farmers to produce crops for biofuels, as the price is higher and they can receive more...
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...1. Suppose your company’s method of making decisions under risk is “making the best out of the worst possible outcome.” What rule would you be forced to follow? The decisions under risk are (1) maximization of expected value, (2) mean-variance analysis, and (3) coefficient of variation analysis. The first two methods involve measuring the riskiness of probability distribution, variance and standard deviation of absolute risk, whereas the coefficient of variation measures risk relative to the expected value of the distribution and allow the manager to make decisions based on relative risk instead of absolute risk. There is no rule that a manager would be forced to follow. There are no rules that specify the method of measuring the risk of a project and ultimately it’s the manager’s expected utility of risk. If a manager behave according to expected utility theory, the decisions are made to maximize the manager’s expected utility of profits. IF the question stated making decisions under conditions of uncertainty, the reply would have been maximin rule – decisions made that identifies the worst outcome for each decision and choosing the decision with the maximum worst payoff (Thomas & Maurice, 2013, p. 647). 2. “A portfolio manager needs to pick winners—assets or securities with high expected returns and low risk.” What is wrong with this statement? This statement should read “A portfolio manager should choose a winning portfolio that matches the level of risk and provides...
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...in order to manage a business in a competitive industry. From a strategic perspective, Do you even lift's initial goal was to make the highest profits and return on equity in both markets by offering a quality entry level and multi featured camera at a reasonable price throughout the game. Despite the sluggish start, we created a big shock in the industry half way through the simulation which quickly transcended our company to become one of the top companies in camera industry. Strengths and Strategies Do you even lift began to dominate the industry by producing and offering a strong quality product in multi feature market and keeping the rest of the costs low and price such as the entry level production and compensation of workers. We decided to employ a strategy that will correct our weaknesses from our worst year in Year 10. Since our entry-level camera was above average during year 10, we wanted to produce a five star multi featured camera. We made sure we produce a product proportional to the compensation of relative productivity of workers. The reason why we wanted to produce the highest quality product because we believed consumers would appreciate our product as time went on as we distinguished ourselves as the best multi featured camera in the market. Since we wanted to stick by our original goal, we decided to lower the price and costs of entry level in order to gain more market share in entry level resulting in above average profits from years 11-15. Another...
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...should not be used to forecast March-May 1978 sales without promotions. In fact, I believe it is the announcement of promotion on January 1st that led to the low sales level in January-February 1978. Retailers would order fewer units prior to the promotion but catch up with more units ordered during promotion period. This should also be considered to cut the attractiveness promotion. Other than the data analysis we did in class, there are a few more reasons I don’t recommend Hartmann to have a price promotion in the following year. First, price promotion will damage Hartmann’s brand image. One of Katz’s principles for Hartmann was to “maintain a prestigious image” (page 2). Since the price promotion itself was not very efficient, why should Hartmann risk its brand image to do it? Second, as Katz said, there are all kinds of different ways to increase total sales, and, based on luggage consumer surveys, price promotion was definitely not the best way for Hartmann to achieve higher sales. From Hartmann’s own survey, durability and style were considered the most important features in selecting luggage (page 5). Although the results itself seems like is...
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...game where players undertake actions with uncertain outcomes” is a definition of the game with asymmetric information. Falls 3. In a separating equilibrium with two types of informed player and two possible actions each type of informed player chooses different action.. True 4. Auction is a public sale in which property or merchandise are sold to the highest bidder. True 5. Private Value Auction is one where True * Each bidder knows his or her value for the object * Bidders differ in their values for the object 6. Common Value Auction is one where the item has a single though unknown value. True 7. English auction is one where: Falls * Bidders call out prices (outcry) * Auctioneer calls out prices (silent) * Bidders hold down button (Japanese) * Second-Highest bidder gets the object 8. Second-price auction is one where: True * All buyers submit bids * Buyer submitting the highest bid wins and pays the second highest bid 9. In a second-price auction bidding your true valuation is a dominated strategy. Falls 10. More bidders usually lead to higher prices. True Part 2 (50%) Explanations and/or calculations are required in all exercises!!! Without it you can get maximum only...
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...I. Abstract There are many reasons why we give gifts today for birthdays, weddings, graduations, etc. to friends and loved ones. A few reasons we give gifts is for peace, protection, love, or because of social obligations. Holiday gifting is a special occasion going back to the beginning of Christianity where the Three Wise Men brought gifts for baby Jesus. This gesture has now turned to giving gifts to our family and friends. The holiday season of 2014 is shaping up to be a prosperous year for retailers. With an estimated 4% increase in holiday sales compared to 2013 and consumer confidence is at its highest because of lower unemployment, higher wages, salaries, and disposable income. Consumers this holiday season are expected to spend approximately $804 on gifts. Along with lower gas and energy prices, consumers are more likely to spend more this holiday than the last on gifts like Disney Frozen Snow Glow Elsa Doll, Apple iPhone 6, and jewelry. Key promotions like Wal-Mart’s price matching policy, Kmart’s layaway service, USPS delivery service schedule hours expansion, the holiday season looks to be headed in a positive way. There are other ways to improve this holiday seasons like online retailers providing free shipping on all purchases or discounting newer products instead of outdated items. The holiday season will be promising! Even 2015 holiday season will be a good one as long as consumers are confident that the U.S. economy is recovering from the recession! II...
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