Why might a profitable motel shut down in the long run

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For each number I need a 250 word answer and 2 responses (ONLY ON 4 &5) to each classmate posted below the question. The response to classmates only needs to be around 150 words.

4: For this week’s discussion, come up with an example of diminishing marginal utility you’ve encountered recently          

 a. DYLAN: The best example I can give of diminishing marginal utility is the sale of  my home.  When we first set out to sell our home, we fascinated about the prospect  of making some profit.  We bought the home fairly cheap and the market seems to  be on the upswing.  We sold our home this week and made considerably more than we originally thought we would.  The utility in this situation was the large profit we are set to receive.  I have never sold an item that has given me such a large return   on my investment.  Dreams of new vehicles and "Big Boy Toys" started to runthrough my mind as I now have access to purchase power beyond my wildest dreams.  

 

 The fantasy was short lived as our thoughts immediately moved to the pending  purchase of our next home.  We will be making our final move as a military familyand we plan on making our final home purchase in the area we plan on settling    down.  As we began the process of looking for new homes, it was apparent that we would have to sink a lot of the profit we made on the sale of our current home into the purchase of the next.  The diminishing marginal utility was the fact that in order to maintain the same quality of life as far as homes go, we will only be holding onto    this large portion of money for a very short time.

          RESPONSE:   b. TROY: A good example that I have come up with is ironically humorous because it relates to my wife and how much I see her. We have been together for  five years and I love her with all of my heart. I was deployed for 9 months last March  and I can remember talking with her on the phone every week and telling myself "I     would never get used to having her around again" because I have missed her so much. I remember talking about the activities we were going to do because we had purchased a new house right before I left as well. I would have paid anything to see her while I was gone, and every minute with her seemed as if it would be priceless. 

               Like our chapters discuss, too much of anything will result in a lower utility, evengranted, I was so excited to see her come home from work every day. I would havedinner prepared and the house cleaned, and I would treat every night as if it were a special occasion, because it my eyes it was. Sooner or later, though these things begin to diminish because you spend three quarters of the day with that person as it is. As her excitement of coming home to me became less and less, mine did as well. There still isn't a day that goes by that I don't show her some sort of appreciation, but the fact of the matter is the excitement of seeing the same person every day  begins to fade. 

          The amount of utility I would gain when I first arrived home was a large amount the   first week. As the second and third week began to set in the amount of utility gained had gotten lower and lower. Since the "product" is available in unlimited amounts, there is a small amount of utility gained every day since I am so used to having it  around.

5. In terms of your study in this course, how might you know that you are at a point of diminishing returns, or where more study will not benefit you like it did before? Can you identify any of the costs discussed in this lesson in your decision about how much study is enough?

  A. JAMES: In terms of studying in this particular course, the realization of diminishing returns becomes evident when the information is not retained. When reading conceptual information, definitions, and scenarios in the text, the knowledge is retained and understandable. However, during the application process of drawing supply and demand curve coupled with applying formulas (elasticity, arc elasticity) and considering changing variables (price ceiling, surplus, shortage, equilibrium, inverse & direct relationship with substitutes and complement, etc…) things can get a little confusing. The longer I spend studying in one session, the greater change of confusion and wasted time. The marginal time spent becomes opportunity cost and the increased confusion will result in diminishing return in terms of yielding a bad grade due to lack of grasping the material.   

  b. If I were to associate my college education with a job in industry, then I would correlate the professor to the foreman with me and the other students as the     workers. In order for us to make a living, we must pass each class, and for undergraduate work that requires at least a C average. However, if we have designs for graduate level work, we should strive for a B to A average in our course work. When looking at the various assignments (demand) we find out how much they are worth towards our overall grade. Some are worth 20% (high return on investment) while others are worth 1% (low return on investment). Our supply in this instance is our time, and our cost associated with completing each assignment is what we could be doing with that time. Understanding this, we would budget our time according to those high paying projects. At some point, we have reached our goal (A or B in the course). At that point, any additional work or study begins to diminish our return on investment (based on our goal). At some point, normally when we reach our goal, or realize that no matter what additional work we complete our grade will not be much higher, we are no longer gaining anything by continuing our studies (with the exception of education, however our goal is grade related) and our time could be spent in other endeavors. When there are multiple classes, this time versus study, versus return on investment must be balanced to achieve harmony. The more classes, the more one must budget their supply against the relative demand of the professors. In any case, by understanding the syllabus and what each assignment offers the student should assist in deciding which investments have diminishing returns.

6. Why might a profitable motel shut down in the long run if the land on which it is located becomes extremely valuable due to surrounding economic development? What kinds of costs are involved in making a decision to shut down?

7. How would a low-cost price leader enforce its leadership through implied threats to a rival? Provide at least one example of such a strategy.

19. Under what elasticity conditions would the following be true: 

"Increasing the minimum wage will result in a decrease in employment for workers who now earn less than the new minimum wage"?

20. Which of the following is (are) most likely to be produced under conditions resembling perfect competition - automobiles, beer, corn, diamonds, and eggs. Defend your answer in economic terms.

Reference no: EM13247248

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