You have tickets to a basketball game, which is an hourâs drive away. Thereâs a blizzard raging outside, and the game is being televised. You can sit warm and safe at home by a roaring fire and watch on TV, or you can bundle up, dig out your car, and go to the game. What do you do?

3a. What type of cost is your expenditure on tickets and why?

3b. Why is the cost of the ticket irrelevant to your current decision about whether to stay at home or go to the game? Explain.

3c. In general, in making a decision whether to attend the basketball game or not during a blizzard, does the person need to look at the benefits vs. the costs of attending the basketball game? If so, what are the benefits vs. the costs of attending the basketball game during a blizzard? In your opinion, should you attend the basketball game if a blizzard is raging outside? Why or why not? Explain.

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Lelia LubowitzLv2

28 Dec 2018

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Chapter 1

What determines whether or not a resource is scarce? Why is the concept of scarcity important to the definition of economics?

Discuss the impact of rational self-interest on each of the following decisions.

Whether to attend college full time or enter the workforce full time

Whether to buy a new textbook or a used one

Whether to attend a local college or an out-of-town college

The owner of a small pizzeria is deciding whether to increase the radius of delivery area by one mile. What considerations must be taken into account if such a decision is to increase profitability?

Chapter 2

Suppose you go to a restaurant and buy an expensive meal. Halfway through, despite feeling quite full, you decide to clean your plate. After all, you think, you paid for the meal, so you are going to eat all of it. Whatâs wrong with this thinking?

You can spend spring break either at home working for $80 per day for five days or go to Florida for the week. If you stay home, your expenses will total about $100. If you go to Florida, the airfare, hotel, food, and miscellaneous expenses will total about $700. Whatâs your opportunity cost of going to Florida?

Provide some examples of specialized markets or retail outlets. What makes the Web so conducive to specialization?

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. Issue Rival A Rival B Rival C Capacity Utilization At full capacity Moderate Very low Goodwill Considerations Very concerned Moderately concerned Not concerned Production Facilities Small and inefficient plant Medium-sized and efficient plant Large and very efficient plant Previous Bidding Pattern Incremental cost plus 35-50% Full cost plus 8-12% Full cost plus 10-15% Cost Structure Incremental costs exceed yours by about 10% Similar cost structure to yours Incremental costs 20% lower but full costs are similar to yours Aesthetic Factors Does not like winter jobs or dirty jobs Does not like messy or inconvenient jobs Likes projects where it can show its creativity Political Factors Decision maker is a relative of the buyer Decision maker is seeking a new job Decision maker is looking for a promotion Show all of your calculations and processes. Describe your answers in three- to five-complete sentences.

A. What price would you bid if you must win the project?

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C. Defend your answers with discussion, making any assumptions you feel are reasonable and/or are supported by the information provided.

raspberrytoad680

I have been asked to write an introduction to a presentation that we have to do as a group, my part is to write an introduction and present it! Case 2: Near-Empty Restaurants and Off-Season Miniature Golf on p. 287 With the understanding of fixed and variable costs and what those mean to a business in both the short run and the long run, address the following questions in your analysis: Why does it makes sense for an airline to offer discounted fares to students, senior citizens, or some other group, when those fares are lower than the average cost per passenger? Would it make sense to offer deeply discounted fares, such as a $59 ticket from Los Angeles to San Francisco, 1 hour before departure? Why? Does it make sense for a restaurant to offer early-bird specials and senior citizen discounts? Explain your answers in terms of the economic concepts of marginal revenue and marginal cost, as applicable

CASE 2 "

Near-Empty Restaurants and Off-Season Miniature Golf empty? Why you might h Have you ever walked into a restaurant for lunch and found it almost to stay open? It might seem that the revenue from so asked, do the restaurants even bother to possibly cover the cost of running the restaurant. customers could not in deciding whether to. open for lunch, a restaurant owner must keep in mind the distinction between fixed and variable costs. Many of a restaurant's costs the rent, kitchen equipment, tables, plates, silverware, and so on are fixed. Shutting down during lunch would not reduce these costs. In other words, these costs are sunk in the short run. When the owner is deciding whether to serve lunch, only the variable costs the price of the additional food, and the wages of the extra staff are relevant. The owner shuts down the restaurant at lunchtime only if the revenue from the few lunchtime customers fails to cover the restaurant's variable costs. An operator of a miniature golf course in a summer resort community faces a similar decision. Because revenue varies substantially from season to season, the firm must decide when to open and when to close. Once again, the fixed costs the costs of buying the land, and building the course is irrelevant in making this short-run decision. The miniature-golf course should be open for business unify during those times of the year when its revenue exceeds its variable costs."