managerial economics 6 1

The discussion requires a minimum of 300 words, 3 scholarly sources, including the textbook. Make sure that you use APA style with your references. Under no circumstances use any direct quotes. Any directly quoted or copied material will result in a zero for the assignment. Let’s be sure to write it in own work 100% and give appropriately when using someone’s else work.

Reference for textbook attached:

Thomas, C. R., & Maurice, S. C. (2010). Managerial economics: Foundations of business analysis and strategy (10th ed.). New York: McGraw-Hill/Irwin.

I want to give you a couple of hints that distinguish perfect competition from monopoly.

Note that a monopolist will produce where MR=MC. Unlike a competitive firm, the monopolist does not have to set P=MR.
The shut-down rule will be the same for the monopolist as it was for a competitive firm.

Don’t forget that your spreadsheet must include embedded formulas in each cell, or you must submit a document showing your calculations done by hand.

1.The Wall Street Journal reported that businesses are aggressively pushing consumers to pay bills electronically. Numerous banks dropped their monthly fees for online bill paying, and many merchants are offering incentives for customers to sign up for online bill payment. Aside from the direct cost savings to businesses, such as lower postage and other administrative costs, what other reason might explain business’s interest in online bill payment?

1,500 word count and there is a total of 8 questions each (not including in-text citation and references as the word count), a minimum of 4 scholarly sources are required in APA format. For the 4 scholarly sources, one from the textbook that’s posted below and the other two from an outside source . Let’s be sure to write it in own work 100% and give appropriately when using someone’s else work. Under no circumstances use any direct quotes. Any directly quoted or copied material will result in a zero for the assignment.

Reference for textbook attached:

Thomas, C. R., & Maurice, S. C. (2010). Managerial economics: Foundations of business analysis and strategy (10th ed.). New York: McGraw-Hill/Irwin.

General Instructions

The El Dorado Star is the only newspaper in El Dorado, New Mexico. Certainly, the Star competes with The Wall Street Journal, USA Today, and the New York Times for national news reporting, but the Star offers readers stories of local interest, such as local news, weather, high-school sporting events, and so on. The El Dorado Star faces the revenue and cost schedules shown in the spreadsheet that follows:

A template for the spreadsheet is provided in the Course Materials. You may download my template or create your own. Since we are using dollars and cents, be sure to go out two decimal places on your calculations. Add columns to show, respectively, marginal cost (MC), marginal revenue (MR), and total profit.

Place your completed spreadsheet in the Drop Box, and use it to answer the following questions. Submission of your template is worth 10 points and counts 500 words toward your word count requirement.

Your spreadsheet must include formulas showing how you arrived at the calculations. As an alternative, you may also submit a document showing your step-by-step calculations for each of the cells. You will not receive credit if you do not show your work using one of these two methods.

Use the spreadsheet to answer questions 1-6. Explain, in detail, how you arrived at your answers to these questions.

Number of newspapers per day (Q)

Total revenue (including advertising revenues) per day (TR)

Total cost per day (TC)

0

0

2500

1000

4000

2600

2000

5000

2700

3000

5500

2860

4000

5750

3020

5000

5950

3200

6000

6125

3390

7000

6225

3590

8000

6125

3810

9000

5975

4050

  • What price should the manager of the EI Dorado Star charge? How many papers should be sold daily to maximize profit?
  • At the price and output level you answered in the previous question, is the EI Dorado Star making the greatest possible amount of total revenue? Is this what you expected? Explain why or why not.
  • Use the appropriate formulas to create two new columns (7 and 8) for total profit and profit margin, respectively. What is the maximum profit the EI Dorado Star can earn? What is the maximum possible profit margin? Are profit and profit margin maximized at the same point on demand?
  • What is the total fixed cost for the El Dorado Star? Explain how you arrived at this conclusion.
  • Create a new spreadsheet in which total fixed cost increases to $5,000. What price should the manager charge? How many papers should be sold in the short run?
  • What should the owners of the Star do in the long run? Should they produce or shut-down? How do we know?
  • Dell Computer Corp., the world’s largest personal-computer maker, is keenly aware of everything its rival PC manufacturers decide to do. Explain why Dell usually reacts more quickly and more substantially to pricing, product design, and advertising decisions made by Hewlett-Packard and Gateway than when these same types of decisions are made by Apple Computer.
  • Two firms, Small and Large, compete by price. Each can choose either a low price or a high price. The following payoff table shows the profit (in thousands of dollars) each firm would earn in each of the four possible decision situations:

Small

Low price

High price

Large

Low price

$1,000, $500

$375, $250

High price

$550, –$100

$575, –$200

a) Is there a dominant strategy for Small? If so, what is it? Why?

b) Is there a dominant strategy for Large? If so, what is it? Why?

c) What is the likely pair of decisions? What payoff will each receive?

 
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