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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. Show all of your calculations and processes. Describe
your answer for 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
www.bus640.com
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)
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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:
==============================================
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)
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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.
==============================================
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:
years.
==============================================
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:
years.
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 Remember Education--bus640.com

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