How high should monopoly set its prices to maximimize profit

Reference no: EM13973881

Question 1

A significant challenge to any auditor is that of auditing a cash intensive business such as a bar or a car wash.

For this week's discussion, identify a specific business type that would historically receive a significant amount of cash in its normal operating schema.

Using this business, discuss and share your thoughts about the obvious weak areas in controls, either by weak design or intentional actions of a company stakeholder that may be subject to fraud or malfeasance. Who would be likely to commit the fraud and what controls you would put into effect to eliminate the possibility of future fraudulent actions?

If you have any real world experiences that you would like to share regarding the challenges created by a business receiving large amounts of cash in its operations, please include them

Respond to this...Many service industry business operates on a cash basis. Some of these include bars, lawn service, dry cleaners, and electronics repair shops to name a few. For this discussion, I will be using a bar as an example since I have some experience with the industry.

In my experience, one of the weakest areas of control in a bar setting is the cash register. Bartenders are supposed to ring up all orders in the cash register, so there is a receipt record of all sales made. However, this is not always the case. In the establishment I worked at, it was found that one or more bartenders were serving drinks and pocketing the cash for the sale without ringing them into the register. Another weak area of control in a bar is inventory. Since not all bartenders will make the same drink the same way, stock can be hard to monitor. While there are guidelines as to how much product should be added to each drink, most bartenders like to "eyeball" what is being added since it is quicker then measuring. This process can lead to overuse of ingredients and shortages of inventory.

In my opinion, there are two types of controls which would help solve the inventory problem. First require bartenders to measure ingredients for drinks. The second would be to install dispensers on the bottles. These dispensers would measure and serve a certain amount of the ingredients to ensure only the right amount is being served. As far as bartenders skimming cash, the only stop this activity would be to keep a closer eye on bartenders. It can be accomplished by either supervision or installation of antitheft devices such as cameras.

Question 2

How high should a monopoly set its prices in order to maximize profits? When you post a response to this question, place it in the context of one of the following examples:

• A geographically isolated gas station.

• A concert on campus.

• Soft drinks at a sporting event.

• A prescription drug.

Respond to this... A monopoly would like to sell lotsof units at a very high price, but a higher price (except under the mostextreme conditions) essentially leads to a loss in sales. A monopoly can chooseprice, or a monopoly can choose quantity and let the demand dictate the price.It is slightly more convenient to formulate the theory in terms of quantityrather than price, because costs are a function of quantity.

With a drink selling at a hugesporting event they are going to maximize their price. They are able to do thisbecause the concession stand knows customers are not allowed to bring drinks inand they will eventually be thirsty and or hungry. Whatever the price is the customerwill have no choice but to buy it until they leave the stadium.

Source: Boundless. "Profit Maximization Function forMonopolies."Boundless Economics. Boundless, 21 Jul. 2015. Retrieved 16 Feb.2016 fromhttps://www.boundless.com/economics/textbooks/boundless-economics-textbook/monopoly-11/monopoly-production-and-pricing-decisions-and-profit-outcome-71/profit-maximization-function-for-monopolies-269-12366/

Question 3

"Today's generation didn't want to watch ancient actors reciting the same tired lines. They wanted to see themselves reflected onscreen - rude, raw, entitled. These kids needed to believe that they themselves were only one daring, controversial act away from being up on that screen themselves."
- Melissa Jo Peltier, Reality Boulevard

Within the past few years, Reality TV has become a staple in the homes of people not just in America, but around the world.

Even some celebrities have given in to the undeniable effect of Reality TV, choosing to have their own lives played out in front of the lens. The term "Reality TV Star" has been coined and is now being uttered on the lips of millions. However one feels about Reality TV, this wave of entertainment seems to be here to stay.

What do you think will be the lasting impact that Reality TV has on the Humanities and how we see ourselves as humans?

Respond to this... I am not a big fan of reality TV, about the only show I sort of enjoyed was "Survivor" the first couple of seasons. What do I think the lasting impact will be? Personally I believe that it is making society more jaded as each reality show has to "top" the rest and keep ramping up the drama. I can't see how this would make anyone view humans as GOOD.

Children who grow up seeing this probably believe that all this drama and ridiculousness is the norm.

Reference no: EM13973881

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