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BUS 640 All New Assignments
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Week 1
Problem 1:
A generous university benefactor has agreed to donate a large amount of
money for student scholarships. The money can be provided in one lump
sum of $12 million in Year 0 (the current year), or in parts, in which $7
million can be provided at the end of Year 1, and another $7 million can
be provided at the end of Year 2.
Describe your answer for each item below in complete sentences,
whenever it is necessary. Show all of your calculations and processes for
the following points:
Assuming the opportunity interest rate is 8%, what is the present value
of the second alternative mentioned above? Which of the two
alternatives should be chosen and why?
How would your decision change if the opportunity interest rate is 12%?
Provide a description of a scenario where this kind of decision between
two types of payment streams applies in the “real-world” business
setting.
Problem 2:

The San Diego LLC is considering a three-year project, Project A,
involving an initial investment of $80 million and the following cash
inflows and probabilities:
Year 0
Initial Investment $80 million discount rate 8%
Year 1 Probability .2 Cash flow $50 million, Probability .3 Cash flow
$40 million,Probability .4 Cash flow $30 million,Probability .1 Cash
flow $20 million
flow $30 million
flow $40 million
Describe your answer for each question in complete sentences,
Describe and calculate Project A’s expected net present value (ENPV)
and standard deviation (SD), assuming the discount rate (or risk-free
interest rate) to be 8%. What is the decision rule in terms of ENPV?
What will be San Diego LLC’s decision regarding this project? Describe
your answer.
The company is also considering another three-year project, Project B,
which has an ENPV of $32 million and standard deviation of $10.5

million. Project A and B are mutually exclusive. Which of the two
projects would you prefer if you do not consider the risk factor? Explain.
Describe the coefficient of variation (CV) and the standard deviation
(SD) in connection with risk attitudes and decision making. If you now
also consider your risk-aversion attitude, as the CEO of the San Diego
LLC will you make a different decision between Project A and Project
B? Why or why not?
BUS640 Week 2 Assignment
Consumer Demand Analysis and Estimation Applied Problems
Please complete the following two applied problems:
Problem 1:
Patricia is researching venues for a restaurant business. She is evaluating
three major attributes that she considers important in her choice: taste,
location, and price. The value she places on each attribute, however,
differs according to what type of restaurant she is going to start. If she
opens a restaurant in a suburban area of Los Angeles, then taste is the
most important attribute, three times as
important as location, and two times as important as price. If she opens a
restaurant in the Los Angeles metropolitan area, then location becomes
three times as important as taste and two times as important as price. She
is considering two venues, respectively, a steak restaurant and a pizza
restaurant, both of which are priced the same. She has rated each
attribute on a scale of 1 to 100 for each of the two different types of
restaurants.
Attribute
Taste
Location
Price

Show all of your calculations and processes. Describe your answer for
each question in complete sentences.
a. Which of the two options should Patricia pursue if she wants to open a
restaurant in a suburban area of Los Angeles? Calculate the total
expected utility from each restaurant option and compare. Graph is not
required. Describe your answer, and show your calculations.
b. Which of the two options should she pick if she plans to open a
restaurant in the Los Angeles metropolitan area? Describe your answer,
and show your calculations.
c. Which option should she pursue if the probability of finding a
restaurant venue in a suburban area can be reliably estimated as 0.7 and
in a metropolitan area as 0.3? Describe your reasoning and show your
calculations.
d. Provide a description of a scenario in which this kind of decision
between two choices, based on weighing their underlying attributes,
applies in the “real-world” business setting. Furthermore, what are the
benefits and drawbacks, if any, to this method of decision making?
Problem 2:
The demand function for Newton’s Donuts has been estimated as
follows:
Qx = -14 – 54Px + 45Py + 0.62Ax
where Qx represents thousands of bagels; Px is the price per bagel; Py is
the average price per bagel of other brands of bagels; and Ax represents
thousands of dollars spent on advertising Newton’s Donuts. The current
values of the independent variables are Ax=120, Px=0.95, and Py=0.64.
each question in complete sentences, whenever it is necessary. a.
Calculate the price elasticity of demand for Newton’s Donuts and

describe what it means. Describe your answer and show your
calculations. b. Derive an expression for the inverse demand curve for
Newton’s Donuts. Describe your answer and show your calculations. c.
If the cost of producing Newton’s Donuts is constant at $0.15 per donut,
should they reduce the price and thereafter, sell more donuts (assuming
profit maximization is the company’s goal)?
d. Should Newton’s Donuts spend more on advertising?
Reference:
Douglas, E. (2012). Managerial Economics (1st ed.). San Diego, CA:
Bridgepoint Education
BUS640 week 3 Assignment
Production Cost Analysis and Estimation Applied Problems
Please, complete the following 3 applied problems in a Word or Excel
document. Show all your calculations and explain your results. Submit
your assignment in the drop box by using the Assignment Submission
button.
1. Jennifer Trucking Company operates a large rig transportation
business in Texas that transports locally grown vegetables to San Diego,
California. The company owns 5 large rigs and hires local drivers paid
fixed salaries monthly, regardless of the number of trips or tons of cargo
that each driver transports each month. The below table presents details
about the number of drivers and the total cargo transported by the
company at different staff levels.
Drivers employed
Total Cargo Transported (tons)
Which inputs are fixed and which are variable in the production function
of Jennifer Trucking Company? Over what ranges do there appear to be
increasing, constant and/or diminishing returns to the number of drivers

employed?
b. What number of drivers appears to be most efficient in terms of
output per driver?
c. What number of drivers appears to minimize the marginal cost of
transportation assuming that all drivers are paid the same salary?
1. 2. The Palms Dry Cleaning Shop in Fort Lauderdale, Florida, faces a
highly seasonal demand for its services, as the snow-birds retirees flock
to Florida in mid-fall to enjoy the mild winter weather and then return to
their main homes in mid-spring. Given this seasonality, Palms tries to
keep the overhead costs as low as possible and therefore, often uses
seasonal contracted labor to man its operations. The following table
shows the labor costs in each month of operation over the past 12
months as well as the total number of garments that were dry-cleaned in
each month.
Palms pays fixed wages per hour to each employee, and we can assume
that the costs of other variable inputs (such as chemicals, electricity, etc)
have remained constant.
Month
June
July
August
September
October
TVC ($)
a. Derive average variable cost (AVC) data from the data in this table.
b. Use gradient analysis to provide an estimate of eleven data points that
seem to represent the MC curve over this range of outputs. Plot these

data points and sketch in estimated MC and AVC curves that seem to
best fit these data points.
c. Suppose that demand is estimated to move from its present (May)
level of 3,500 units to 4,000 units next month (June). What is the
incremental cost of meeting this demand?
d. Assuming that Palm’s price to dry clean a garment has been constant
at $15 over the past year, and will remain at that level, what contribution
to overheads and profit can it expect in June?
2. 3. Over the past 12 months the Four Winds Novelty Company firm
has recorded its internet sales (equals monthly output levels) and its
monthly total variable costs (TVC) for a particular novelty item as
shown in the following table. Sales have grown over this period with
relatively few shocks due to uncontrollable weather, political and
sporting events. This online retailer carries no inventories; when it
receives a pre-paid on-line order from a customer, it simply buys the
product from a supplier and ships it out to the customer.
Sales = Output
TVC ($)
102,813
a.Using regression analysis, find an equation that best fits the data to
represent the TVC function.
b. At what sales/output level will marginal costs (MC) reach a
minimum?
c. Estimate the value of TVC for sales/output level 250,000 units, and
calculate the 95% confidence interval for your estimate.
Market Structures and Pricing Decisions Applied Problems.

Problem 1:
Robert’s New Way Vacuum Cleaner Company is a newly started small
business that produces vacuum cleaners and belongs to a
monopolistically competitive market. Its demand curve for the product is
expressed as Q = 5000 – 25P where Q is the number of
vacuum cleaners per year and P is in dollars. Cost estimation processes
have determined that the firm’s cost function is represented by TC =
1500 + 20Q + 0.02Q2.
each question in complete sentences, whenever it is necessary.
a. What are the profit-maximizing price and output levels? Explain
them and calculate algebraically for equilibrium P (price) and Q
(output). Then, plot the MC (marginal cost), D (demand), and MR
(marginal revenue) curves graphically and illustrate the equilibrium
point.
b. How much economic profit do you expect that Robert’s company will
make in the first year?
c. Do you expect this economic profit level to continue in subsequent
years? Why or why not?
Problem 2:
Greener Grass Company (GGC) competes with its main rival, Better
Lawns and Gardens (BLG), in the supply and installation of in-ground
lawn watering systems in the wealthy western suburbs of a major east-
coast city. Last year, GGC’s price for the typical lawn system was
$1,900 compared with BLG’s price of $2,100. GGC installed 9,960
systems, or about 60% of total sales and BLG installed the rest. (No
doubt many additional systems were installed by do-it-yourself
homeowners because the parts are readily available at hardware stores.)
GGC has substantial excess capacity–it could easily install 25,000
systems annually, as it has all the necessary equipment and can easily

hire and train installers. Accordingly, GGC is considering expansion into
the eastern suburbs, where the homeowners are less wealthy.
In past years, both GGC and BLG have installed several hundred
systems in the eastern suburbs but generally their sales efforts are met
with the response that the systems are too expensive. GGC has hired you
to recommend a pricing strategy for both the western and eastern suburb
markets for this coming season. You have estimated two distinct demand
functions, as follows:
Qw =2100 – 6.25Pgw + 3Pbw + 2100Ag - 1500Ab + 0.2Yw
for the western market and
Qe = 36620 - 25Pge + 7Pbe + 1180Ag - 950Ab + 0.085Ye
for the eastern market, where Q refers to the number of units sold; P
refers to price level; A refers to advertising budgets of the firms (in
millions); Y refers to average disposable income levels of the potential
customers; the subscripts w and e refer to the western and
eastern markets, respectively; and the subscripts g and b refer to GGC
and BLG, respectively. GGC expects to spend $1.5 million (use Ag =
1.5) on advertising this coming year and expects BLG to spend $1.2
million (use Ab = 1.2) on advertising. The average household disposable
income is $60,000 in the western suburbs and $30,000 in the eastern
suburbs. GGC does not expect BLG to change its price from last year
because it has already distributed its glossy brochures (with the $2,100
price stated) in both suburbs, and its TV commercial has already been
produced. GGC’s cost structure has been estimated as TVC = 750Q +
0.005Q2, where Q represents single lawn watering systems.
each item below in complete sentences, whenever it is necessary.
a. Derive the demand curves for GGC’s product in each market.
b. Derive GGC’s marginal revenue (MR) and marginal cost (MC) curves
in each market. Show graphically GGC’s demand, MR, and MC curves

for each market.
c. Derive algebraically the quantities that should be produced and sold,
and the prices that should be charged, in each market.
d. Calculate the price elasticities of demand in each market and discuss
these in relation to the prices to be charged in each market.
e. Add a short note to GGC management outlining any reservations and
qualifications you may have concerning your price recommendations.
Reference:
1. Your company, Bright Paints, is one of a dozen companies
manufacturing a special reflective paint used for traffic signs. The State
Department of Transportation has called for tenders to supply 10,000
gallons of blue reflective paint to be delivered within two months. You
can foresee fitting in a production run of the blue paint and have decided
to bid on the job. You calculate your incremental costs for this job to be
$76,200. This particular contract is standard, similar in all in respects to
hundreds of contracts you have bid on over the past few years. Your
pricing policy has been to apply a mark-up to incremental costs to arrive
at the bid price. Your mark-up has been higher when you had plenty of
orders and lower when you had few or no orders to fulfill. You have
assembled data relating the mark-up rate used and the percentage of
contracts won at each mark-up rate, as follows.
Mark-up rate (%) Percentage of contracts won at that rate (%)
0 95.9
10 84.8
15 65.4
20 41.3
25 15.7
30 3.0
35 0

A. Why would your company have bid with a zero mark-up on some
past tenders? Why didn’t it win all of those contracts?
b. What is the bid price that maximizes the expected contribution of the
contract?
c. Why, or why not, is the fixed-price mode of bidding likely to be the
best one to use for this contract?
2. In calculating the incremental cost of a particular project, how would
you treat the possible future costs of a lawsuit that may occur as a result
of this project, where the cost of the lawsuit might range from $10,000
to $500,000 with an associated probability distribution?
BUS640 Week 6 Paper(Wal-Mart)
Managerial Decision Making Research and Analysis
Research a specific company of your choice and identify some of the
managerial decisions that were made over time and in response to
changes in its market or competitive environment. Use Ashford
University Online library and web-based resources for your research. At
least 3 external resources must be used. Address all of the following
areas:
Focus of the Final Paper
Describe the company and provide a brief history of its operations. Find
or use graphs to illustrate its financial performance over the years.
Identify any sources of risk or uncertainty in its operations. Do the
financial reports indicate risky or uncertain activities or changes to the
economic environment that ultimately appear to have affected the
company’s financial outcomes? Be specific.

Are there any government regulations that have affected this company’s
operations domestically or abroad? Explain.
Describe the inputs that are used in this company’s production function
and identify any challenges to securing these inputs.
Determine if the company has introduced new products in existing
markets or created new markets over time. What is the impact on its
finances?
Determine if the price of its products increased or declined over time
and analyze the reasons for price fluctuations. Study the demand
elasticity for its products and discuss the availability of close substitutes
for its products. How does that affect pricing decisions?
Analyze the company’s profitability. Identify the economy or industry
influences on its costs, operations, and profitability.
Describe the competitive environment in which the firm operates, the
distribution of market power, and the strategic behavior of the firm and
its competitors. Apply your knowledge of the theory of this company’s
market structure. How does the company make pricing and production
decisions? Is your observation supported by the theoretical models?
Refer to the financial reports for illustration.
Identify any non-price competitive strategies that the company might be
engaging in? Provide specific examples.
Evaluate if the company made any mistakes in its decisions over time,
and recommend any changes or improvements for the future operations.
Refer to the financial reports when making specific observations or
recommendations.
Use economic language and demonstrate your understanding of the
concepts and theories of this course.
Writing the Final Paper
The Final Paper:

1. Must be 8 to 10 double-spaced pages in length, and formatted
according to APA style as outlined in the Ashford Writing Center.
2. Must include a title page with the following:
a. Title of paper
b. Student’s name
c. Course name and number
d. Instructor’s name
e. Date submitted
3. Must begin with an introductory paragraph that has a succinct thesis
statement.
4. Must address the topic of the paper with critical thought.
5. Must end with a conclusion that reaffirms your thesis.
6. Must use at least 3 scholarly sources.
7. Must document all sources in APA style, as outlined in the Ashford
Writing Center.
8. Must include a separate reference page, formatted according to APA
style as outlined in the Ashford Writing Center.

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BUS 640 Entire Course
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BUS 640 Week 1 DQ 1 Firm Objectives
BUS 640 Week 1 DQ 2 Decision Making Under Uncertainty
BUS 640 Week 1 Economics of Risk and Uncertainty Applied Problems
BUS 640 Week 2 DQ 1 Marginal Rate of Substitution
BUS 640 Week 2 DQ 2 Demand Elasticity
BUS 640 Week 2 Consumer Demand Analysis and Estimation Applied
Problems
BUS 640 Week 3 DQ 1 Relevant Costs
BUS 640 Week 3 DQ 2 Contribution Analysis
BUS 640 Week 3 Production Cost Analysis and Estimation Applied
Problems
BUS 640 Week 4 DQ 1 Strategic Behavior Oligopolies
BUS 640 Week 4 DQ 2 Local Market Power
BUS 640 Week 4 Market Structures and Pricing Decisions Applied
Problems
BUS 640 Week 4 Journal Economics in News
BUS 640 Week 5 DQ 1 Good Will in Price Bidding
BUS 640 Week 5 DQ 2 New Product Introduction
BUS 640 Week 5 Price Quotes and Pricing Decisions Applied Problems

BUS 640 Week 6 DQ 1 Game Theory and Strategic Behavior
BUS 640 Week 6 DQ 2 Sustainable Competitive Advantage
BUS 640 Week 6 Final Paper Managerial Decision Making
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BUS 640 Week 1 DQ 1 Firm Objectives
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Firm Objectives. Why do some business firms pursue a triple-bottom-
line outcome while others focus only on profit maximization? Please,
use a real company example to illustrate your points
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BUS 640 Week 1 DQ 2 Decision Making Under
Uncertainty
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Decision Making Under Uncertainty. To save on gasoline expenses,
Edith and Mathew agreed to carpool together for traveling to and from
work. Edith preferred to travel on I-20 highway as it was usually the
fastest, taking 25 minutes in the absence of traffic delays. Mathew
pointed out that traffic jams on the highway can lead to long delays
making the trip 45 minutes. He preferred to travel along Shea Boulevard,
which was longer (35 minutes), but rarely had traffic jams. Edith agreed
that in case of traffic jams, Shea Boulevard was a reasonable alternative.
Neither of them knows the state of the highway ahead of time.
After driving to work on the I-20 highway for 1 month (20 workdays),
they found the highway to be jammed 3 times. Assuming that this month
is a good representation of all months ahead, should Edith and Mathew
continue to use the highway for traveling to work?
How would you conclusion change for the winter months, if bad weather
makes it likely for traffic jams on the highway to increase to 6 days per
month?
How would your conclusion change if Mathew purchased a new smart-
phone app that could show the status of the highway traffic prior to their
drive each morning, thus reducing the probability of them getting into a
jam down to only 1day per month (where on this day, the app showed no
traffic jam, but a jam developed in the meantime as they were driving
along the highway).
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BUS 640 Week 1 Economics of Risk and Uncertainty
Applied Problems (New)
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Problem 1:
A generous university benefactor has agreed to donate a large amount of
money for student scholarships. The money can be provided in one lump
sum of $12 million in Year 0 (the current year), or in parts, in which $7
million can be provided at the end of Year 1, and another $7 million can
be provided at the end of Year 2.
Describe your answer for each item below in complete sentences,
Assuming the opportunity interest rate is 8%, what is the present value
of the second alternative mentioned above? Which of the two
alternatives should be chosen and why?
How would your decision change if the opportunity interest rate is
12%?
Provide a description of a scenario where this kind of decision between
two types of payment streams applies in the “real-world” business
setting.
Problem 2:
The San Diego LLC is considering a three-year project, Project A,
involving an initial investment of $80 million and the following cash
inflows and probabilities:

Year 0
Initial Investment $80 million discount rate 8%
flow $20 million
flow $30 million
flow $40 million
Describe your answer for each question in complete sentences,
Describe and calculate Project A’s expected net present value (ENPV)
and standard deviation (SD), assuming the discount rate (or risk-free
interest rate) to be 8%. What is the decision rule in terms of ENPV?
What will be San Diego LLC’s decision regarding this project? Describe
your answer.
The company is also considering another three-year project, Project B,
which has an ENPV of $32 million and standard deviation of $10.5
million. Project A and B are mutually exclusive. Which of the two
projects would you prefer if you do not consider the risk factor?
Explain.
Describe the coefficient of variation (CV) and the standard deviation
(SD) in connection with risk attitudes and decision making. If you now
also consider your risk-aversion attitude, as the CEO of the San Diego
LLC will you make a different decision between Project A and Project
B? Why or why not?

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BUS 640 Week 2 Consumer Demand Analysis and
Estimation Applied Problems (New)
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We have another Set (old one) of Week 2 Assignment (But with different
description, values), it can be found on this link
Week 2 Assignment
Consumer Demand Analysis and Estimation Applied Problems
Problem 1:
Patricia is researching venues for a restaurant business. She is evaluating
three major attributes that she considers important in her choice: taste,
location, and price. The value she places on each attribute, however,
differs according to what type of restaurant she is going to start. If she
opens a restaurant in a suburban area of Los Angeles, then taste is the
most important attribute, three times as important as location, and two
times as important as price. If she opens a restaurant in the Los Angeles
metropolitan area, then location becomes three times as important as

taste and two times as important as price. She is considering two venues,
respectively, a steak restaurant and a pizza restaurant, both of which are
priced the same. She has rated each attribute on a scale of 1 to 100 for
each of the two different types of restaurants.
Attribute
Steak
Restaurant
Pizza
Restaurant
Taste 80 70
Location 55 80
Price 65 50
each question in complete sentences.
a. Which of the two options should Patricia pursue if she wants to
open a restaurant in a suburban area of Los Angeles? Calculate the
total expected utility from each restaurant option and compare.
Graph is not required. Describe your answer, and show your
calculations.
b. Which of the two options should she pick if she plans to open a
restaurant in the Los Angeles metropolitan area? Describe your
answer, and show your calculations.
c. Which option should she pursue if the probability of finding a
restaurant venue in a suburban area can be reliably estimated as 0.7
and in a metropolitan area as 0.3? Describe your reasoning and
show your calculations.
d. Provide a description of a scenario in which this kind of decision
between two choices, based on weighing their underlying
attributes, applies in the “real-world” business setting.
Furthermore, what are the benefits and drawbacks, if any, to this
method of decision making?

Problem 2:
The demand function for Newton’s Donuts has been estimated as
follows:
Qx = -14 – 54Px + 45Py + 0.62Ax
where Qx represents thousands of donuts; Px is the price per donut; Py is
the average price per donut of other brands of donuts; and Ax represents
thousands of dollars spent on advertising Newton’s Donuts. The current
values of the independent variables are Ax=120, Px=0.95, and Py=0.64.
a. Calculate the price elasticity of demand for Newton’s Donuts and
describe what it means. Describe your answer and show your
calculations.
b. Derive an expression for the inverse demand curve for Newton’s
Donuts. Describe your answer and show your calculations.
c. If the cost of producing Newton’s Donuts is constant at $0.15 per
donut, should they reduce the price and thereafter, sell more donuts
(assuming profit maximization is the company’s goal)?
d. Should Newton’s Donuts spend more on advertising?
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BUS 640 Week 2 DQ 1 Marginal Rate of Substitution

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Marginal Rate of Substitution. What is the marginal rate of substitution
(MRS) and why does it diminish as the consumer substitutes one product
for another? Use examples to illustrate
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BUS 640 Week 2 DQ 2 Demand Elasticity
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Demand Elasticity. Please, read the article Hainer, R. (2010), provided
in the required readings section for this week. The tobacco industry is a
prime example to consider when talking about price elasticity of
demand. While nicotine use can be addictive for many users, it is not
addictive for the so-called "social smokers".
What can we say about the price elasticity of demand for nicotine
products (such as cigarettes, pipes, tobacco) in the group of nicotine
addicted users, versus the group of "social smokers"? Can we say whose
demand is likely to be more elastic? Why?
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BUS 640 Week 3 DQ 1 Relevant Costs
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Relevant Costs. Two partners own together a small landscaping business
in North Carolina, called Summer Lawn Care. They have been
specializing in summer grass seeding, installation, and maintenance.
Recently, the partners acquired special technology and know-how for
winter grass installations and maintenance. They also added a tree
cutting service as recent storms in the area had caused demand for this
service to soar. One of the partners insists that the name of the business
should change to Lawn and Tree Care, so that it better reflects the range
of services and, thus, generates more customer interest, and thus
contracts. The second partner wants to keep the old name and argues,
“We have already paid for business cards, vehicle paint, signage, and
ads in Yellow Pages”. Evaluate the arguments of the two partners.
Explain and illustrate their points by identifying the relevant and
irrelevant costs for this decision.
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BUS 640 Week 3 DQ 2 Contribution Analysis
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Contribution Analysis. Explain what is meant by “contribution
analysis”. Carefully define the term and provide examples to illustrate it.
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BUS 640 Week 3 Production Cost Analysis and
Estimation Applied Problems (New)
www.bus640.com
We have another Set (old one) of Week 3 Assignment (But with
different description, values), it can be found on this link
Production Cost Analysis and Estimation Applied Problems
Problem 1:
William is the owner of a small pizza shop and is thinking of increasing
products and lowering costs. William’s pizza shop owns four ovens and
the cost of the four ovens is $1,000. Each worker is paid $500 per week.
Workers employed
Qty of pizzas produced per
week
0 0

1 75
2 180
3 360
4 600
5 900
6 1140
7 1260
8 1360
a. Which inputs are fixed and which are variable in the production
function of William’s pizza shop? Over what ranges do there
appear to be increasing, constant, and/or diminishing returns to the
number of workers employed?
b. What number of workers appears to be most efficient in terms of
pizza product per worker?
c. What number of workers appears to minimize the marginal cost of
pizza production assuming that each pizza worker is paid $500 per
week?
d. Why would marginal productivity decline when you hire more
workers in the short run after a certain level?
e. How would expanding the business affect the economies of scale?
When would you have constant returns to scale or diseconomies of
scale? Describe your answer.
Problem 2:
The Paradise Shoes Company has estimated its weekly TVC function
from data collected over the past several months, as TVC = 3450 + 20Q

+ 0.008Q2 where TVC represents the total variable cost and Q
represents pairs of shoes produced per week. And its demand equation is
Q = 4100 – 25P. The company is currently producing 1,000 pairs of
shoes weekly and is considering expanding its output to 1,200 pairs of
shoes weekly. To do this, it will have to lease another shoe-making
machine ($2,000 per week fixed payment until the lease period ends).
each item below in complete sentences, whenever it is necessary.
a. Describe and derive an expression for the marginal cost (MC)
curve.
b. Describe and estimate the incremental costs of the extra 200 pairs
per week (from 1,000 pairs to 1,200 pairs of shoes).
c. What are the profit-maximizing price and output levels for
Paradise Shoes? Describe and calculate the profit-maximizing
price and output.
d. Discuss whether or not Paradise Shoes should expand its output
further beyond 1,200 pairs per week. State all assumptions and
qualifications that underlie your recommendation.
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BUS 640 Week 4 DQ 1 Strategic Behavior Oligopolies
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Strategic Behavior Oligopolies. An interesting example of strategic
behavior comes from a 1997 article about Microsoft’s investment in
Apple (New Straits Times, 1997). The article is included in the Required
Readings list. Facing tough anti-trust scrutiny from government
agencies, Microsoft provided financial support to Apple in order to
ensure Apple’s survival and, therefore, to ensure that competitiveness in
the industry remains. Moreover, the partnership with Apple provided an
additional market for Microsoft’s products – the MS Office and the IE
products were to be bundled with the MAC OS as one of the conditions
for this financing. Discuss this case in the context of market structure
and strategic behavior. What market structure do these firms operate in?
Why did Microsoft need to preserve competitiveness in the industry?
What was Microsoft afraid of in the event that Apple did not survive?
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BUS 640 Week 4 DQ 2 Local Market Power
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Local Market Power. Bulls Eye department store specializes in the sales
of discounted clothing, shoes, household items, etc. similar to the
offerings at a regular Walmart or Target. Bulls Eye is the only

department store in Show Low and the nearest other discount retailer is
Target, located 49 miles away in Eagar. Bulls Eye, therefore, has some
market power in its local area. Despite having some market power, Bulls
Eye is currently suffering losses. An analyst at Bulls Eye is
recommending to the manager to raise prices, so that profitability can be
improved. The manager is unsure of this strategy as recent data points to
increasing numbers of individuals shopping more and more. What are
the pros and cons of raising the prices at Bulls Eye and would that
strategy be profitable?
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BUS 640 Week 4 Market Structures and Pricing
Decisions Applied Problems (New)
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We have another Set (old one) of Week 4 Assignment (But with different description, values),
it can be found on this link
Market Structures and Pricing Decisions Applied Problems.
Problem 1:
Robert’s New Way Vacuum Cleaner Company is a newly started small business that
produces vacuum cleaners and belongs to a monopolistically competitive market. Its
demand curve for the product is expressed as Q = 5000 – 25P where Q is the number of
vacuum cleaners per year and P is in dollars. Cost estimation processes have determined
that the firm’s cost function is represented by TC = 1500 + 20Q + 0.02Q2.
Show all of your calculations and processes. Describe your answer for each question in
complete sentences, whenever it is necessary.
a. What are the profit-maximizing price and output levels? Explain them and calculate
algebraically for equilibrium P (price) and Q (output). Then, plot the MC (marginal
cost), D (demand), and MR (marginal revenue) curves graphically and illustrate the
equilibrium point.
b. How much economic profit do you expect that Robert’s company will make in the
first year?
c. Do you expect this economic profit level to continue in subsequent years? Why or
why not?
Problem 2:
Greener Grass Company (GGC) competes with its main rival, Better Lawns and Gardens
(BLG), in the supply and installation of in-ground lawn watering systems in the wealthy
western suburbs of a major east-coast city. Last year, GGC’s price for the typical lawn
system was $1,900 compared with BLG’s price of $2,100. GGC installed 9,960 systems, or
about 60% of total sales and BLG installed the rest. (No doubt many additional systems
were installed by do-it-yourself homeowners because the parts are readily available at
hardware stores.)
GGC has substantial excess capacity–it could easily install 25,000 systems annually, as it
has all the necessary equipment and can easily hire and train installers. Accordingly, GGC
is considering expansion into the eastern suburbs, where the homeowners are less wealthy.
In past years, both GGC and BLG have installed several hundred systems in the eastern
suburbs but generally their sales efforts are met with the response that the systems are too
expensive. GGC has hired you to recommend a pricing strategy for both the western and
eastern suburb markets for this coming season. You have estimated two distinct demand
functions, as follows:
Qw =2100 – 6.25Pgw + 3Pbw + 2100Ag - 1500Ab + 0.2Yw
for the western market and
Qe = 36620 - 25Pge + 7Pbe + 1180Ag - 950Ab + 0.085Ye
for the eastern market, where Q refers to the number of units sold; P refers to price level; A
refers to advertising budgets of the firms (in millions); Y refers to average disposable
income levels of the potential customers; the subscripts w and e refer to the western and
eastern markets, respectively; and the subscripts g and b refer to GGC and BLG,
respectively. GGC expects to spend $1.5 million (use Ag = 1.5) on advertising this coming
year and expects BLG to spend $1.2 million (use Ab = 1.2) on advertising. The average
household disposable income is $60,000 in the western suburbs and $30,000 in the eastern

suburbs. GGC does not expect BLG to change its price from last year because it has
already distributed its glossy brochures (with the $2,100 price stated) in both suburbs, and
its TV commercial has already been produced. GGC’s cost structure has been estimated as
TVC = 750Q + 0.005Q2, where Q represents single lawn watering systems.
Show all of your calculations and processes. Describe your answer for each item below in
complete sentences, whenever it is necessary.
a. Derive the demand curves for GGC’s product in each market.
b. Derive GGC’s marginal revenue (MR) and marginal cost (MC) curves in each
market. Show graphically GGC’s demand, MR, and MC curves for each market.
c. Derive algebraically the quantities that should be produced and sold, and the prices
that should be charged, in each market.
d. Calculate the price elasticities of demand in each market and discuss these in
relation to the prices to be charged in each market.
e. Add a short note to GGC management outlining any reservations and qualifications
you may have concerning your price recommendations.
Reference:
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BUS 640 Week 5 DQ 1 Good Will in Price Bidding
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Good Will in Price Bidding. Sometimes, a bidder on a work contract
may bid lower than what would maximize his/her profit from the
contract and the reason for that is to create goodwill (to increase
expected future business from the buyer). How would you value the
goodwill that is obtained in this way?
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BUS 640 Week 5 DQ 2 New Product Introduction

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New Product Introduction. Bayer Schering Pharma AG, Germany owns
the Alka-Seltzer, which was launched in 1931 and was meant for relief
of minor aches, pains, inflammation, fever, headache, heartburn, sour
stomach, indigestion, and hangovers. The Alka-Seltzer Plus was a spin-
off of the original medicine, meant to relieve colds and flu.
The company has recently introduced a new and improved Alka-Seltzer
Plus, as described in the TV ad: “The Cold Truth”, (please, watch the ad
listed in the Required Readings)
==============================================
BUS 640 Week 5 Price Quotes and Pricing Decisions
Applied Problems (New)
www.bus640.com

We have another Set (old one) of Week 5 Assignment (But with different
description, values), it can be found on this link
Week 5 Assignment
Price Quotes and Pricing Decisions Applied Problems
Problem 1:
Jessica Alba, a famous actress, starts the baby and family products
business, The Honest Company, with Christopher Gavigan. Alba and
Gavigan set up their site so families can choose what kinds of non-toxic,
all-natural products they'd like to use and get them in a bundle. Families
can choose all kinds of products from food to hygiene necessities and
cleaning supplies. Suppose they are thinking of expanding their business
into five domestic markets: Phoenix, Dallas, Chicago, New York, and
Atlanta. Assume their primary goal of business is to maximize economic
profits, although they want to do business honestly.
Show all your calculations and process. Describe your answer for each
question in three- to five-complete sentences.
a. You are a business adviser for Alba and Gavigan. Describe a
skimming price and a penetration price, and advise them whether
they should charge a skimming price or a penetration price, with
supportive reasoning for and against each pricing alternative.
b. Are they likely to make economic profits initially? Can they
continue to make economic profits in the long term? Why or why
not? Discuss.
c. What advice would you give to Alba and Gavigan to help them
make more profit in the long term?

Problem 2:
You operate your own small building company and have decided to bid
on a government contract to build a pedestrian walkway in a national
park during the coming winter. The walkway is to be of standard
government design and should involve no unexpected costs. Your
present capacity utilization rate is moderate and allows sufficient scope
to understand this contract, if you win it. You calculate your incremental
costs to be $268,000 and your fully allocated costs to be $440,000. Your
usual practice is to add between 60% and 80% to your incremental costs,
depending on capacity utilization rate and other factors. You expect
three other firms to also bid on this contract, and you have assembled the
following competitor intelligence about those companies.
==============================================
BUS 640 Week 6 DQ 1 Game Theory and Strategic
Behavior
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Game Theory and Strategic Behavior. Suppose that GE is trying to
prevent Maytag from entering the market for high efficiency clothes
dryers. Even though high efficiency dryers are more costly to produce,
they are also more profitable as they command sufficiently higher prices

from consumers. The following payoffs table shows the annual profits
for GE and Maytag for the advertising spending and entry decisions that
they are facing.
Based on this information, can GE successfully prevent Maytag from
entering this market by increasing its advertising levels? What is the
equilibrium outcome in this game?
==============================================
BUS 640 Week 6 DQ 2 Sustainable Competitive
Advantage
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Sustainable Competitive Advantage. Describe the circumstances under
which a firm chooses a low-cost strategy to attain sustainable
competitive advantage. What about the situations when a differentiation
strategy is chosen? Provide specific real world examples.
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BUS 640 Week 6 Final Paper (Apple)

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We have another set of final paper based on walmart which could be
found on this link
changes in its market or competitive environment. Use the Ashford
University Online Library and web-based sources for your research. At
least three external scholarly sources must be used. Address all of the
following areas:
==============================================
BUS 640 Week 6 Final Paper (Wal-mart)

www.bus640.com
We have another set of Final Paper based on Apple company, it could
be found on this link
BUS640 Week 6 Paper(Wal-Mart)
Managerial Decision Making Research and Analysis
changes in its market or competitive environment. Use Ashford
University Online library and web-based resources for your research. At
least 3 external resources must be used. Address all of the following
areas:

Describe the inputs that are used in this company’s production function
and identify any challenges to securing these inputs.
Determine if the company has introduced new products in existing
markets or created new markets over time. What is the impact on its
finances?
Determine if the price of its products increased or declined over time
and analyze the reasons for price fluctuations. Study the demand
elasticity for its products and discuss the availability of close substitutes
for its products. How does that affect pricing decisions?
Analyze the company’s profitability. Identify the economy or industry
influences on its costs, operations, and profitability.
Describe the competitive environment in which the firm operates, the
distribution of market power, and the strategic behavior of the firm and
its competitors. Apply your knowledge of the theory of this company’s
market structure. How does the company make pricing and production
decisions? Is your observation supported by the theoretical models?
Refer to the financial reports for illustration.
Identify any non-price competitive strategies that the company might be
engaging in? Provide specific examples.
Evaluate if the company made any mistakes in its decisions over time,
and recommend any changes or improvements for the future operations.
Refer to the financial reports when making specific observations or
recommendations.
Use economic language and demonstrate your understanding of the
concepts and theories of this course.
Writing the Final Paper
The Final Paper:
1. Must be 8 to 10 double-spaced pages in length, and formatted
according to APA style as outlined in the Ashford Writing Center.

2. Must include a title page with the following:
a. Title of paper
b. Student’s name
c. Course name and number
d. Instructor’s name
e. Date submitted
3. Must begin with an introductory paragraph that has a succinct thesis
statement.
4. Must address the topic of the paper with critical thought.
5. Must end with a conclusion that reaffirms your thesis.
6. Must use at least 3 scholarly sources.
7. Must document all sources in APA style, as outlined in the Ashford
Writing Center.
8. Must include a separate reference page, formatted according to APA
style as outlined in the Ashford Writing Center.
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BUS 640 Redefined Education--bus640.com

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