Reference no: EM131600979

For this assignment, answer the following questions.

Jones is the manager of an upscale clothing store in a shopping mall that contains only two such stores.  While these two competitors do not carry the same brands of clothes, the firms both serve a similar clientele.  Jones was recently notified that the mall is going to implement a 10% across-the-board increase in rents to all stores in the mall, effective next month.  Should Jones raise prices 10 percent to offset the increase in monthly rent?  Why or why not?  Explain carefully.

An office manager is concerned with declining productivity. Despite the fact that she regularly monitors the clerical staff four times each day - at 9:00 AM, 11:00 AM, 1:00 PM, and 3:00 PM - office productivity has declined 30 percent since she assumed the helm one year ago.  Would you recommend that the office manager invest more time monitoring the productivity of the clerical staff?  Why or why not?  Explain.

You are the manager of a chain of movie theaters that are monopolies in their respective markets.  You have noticed a much higher demand on weekends than during the week.  You therefore conduct a study that reveals two different demand curves at your theaters.  On weekends, the demand function is P = 20 - 0.001Q, and on weekdays it is P = 15 - 0.002Q.  You acquire legal rights from movie producers to show their films at a cost of $25,000 per movie, plus a $2.50 "royalty" for each moviegoer entering your theaters.  You also have determined that the average moviegoer in your markets watches a movie only once.  Devise a pricing strategy that will maximize profits.  Explain why it the strategy will work.

This past year, Used Imported Autos sold very few cars and lost over $500,000.  As a consequence, its management staff has hired you to help choose between two different strategies it is contemplating to raise sales volumes.  The low-cost strategy involves changing the dealership name to Quality Used Imported Autos to signal to customers that the company sells high-quality cars.  The high-cost strategy involves issuing a 10-point auto inspection report on all used cars on the lot and offering consumers a 30-day warranty on every used car sold.  Which of the two strategies would you recommend to have the greatest impact on sales volume?  Why? Explain.

You are the manager of a firm that competes against four other firms by bidding for government contracts.  While you believe your product is better than the competition's, the government purchasing agent views the products as identical and purchases from the firm offering the best price. Total government demand is represented by the equation Q = 1,000 - 5P, and all five firms produce at a constant marginal cost of $60.  For security reasons, the government has imposed restrictions that permit a maximum of five firms to compete in the market; thus entry by new firms is prohibited.  A member of Congress is concerned because no restrictions have been placed on the price that the government pays for this product.  In response, she has proposed legislation that would award each existing firm 20 percent of a contract for 625 units at a contracted price of $75 per unit.  Would you support or oppose this legislation?  Why?  Explain.

Moses Inc. is a small electric company that provides power to customers in a small rural area in the Southwest. The company is currently maximizing its profits by selling electricity to consumers at a price of $0.15 per kilowatt-hour.  Its marginal cost is $0.05 per kilowatt-hour and its average cost is $0.15 per kilowatt-hour.  A government regulator is considering a proposal to regulate the firm's price at $0.05 kilowatt-hour. Do you agree or disagree with this proposed legislation?  Why or why not?  Explain what is right or wrong with the proposal and whether such a policy improves social welfare.