ECON201 Week 3 Discussion Price Discrimination

Movie theaters, airlines, and many other businesses like to charge customers different prices based on time of the day, age, and purchase dates. Why?

Provide an example of a price discrimination for a good or service that you thought it to unfair. Do you still believe that the discrimination is unjustifiable?

 

 

ECON201 Midterm Exam SCORE 100 PERCENT

Quiz
Question 1 (5 points)
 
Economics is the study of:
Question 1 options:

increasing the level of productive resources so there is maximum output in society.

increasing the level of productive resources so there is a minimum level of income.

how people, institutions, and society make choices under conditions of scarcity.

the efficient use of scarce resources paid for at the minimum level of cost to consumers and businesses.
Question 2 (5 points)
 
Which of the following is not a central focus of the "economic perspective"?
Question 2 options:

Scarcity and choice.

The scientific method.

Purposeful behavior.

Marginal analysis.
Question 3 (5 points)
 
The satisfaction or pleasure one gets from consuming a good or service is:
Question 3 options:

price.

utility.

consumption.

preferences.
Question 4 (5 points)
 
The private ownership of property resources and use of prices to direct and coordinate economic activity is characteristic of:
Question 4 options:

a command system.

a market system.

communism.

socialism.
Question 5 (5 points)
 
Which statement best describes a capitalist economy?
Question 5 options:

The production of goods and services is determined primarily by markets, but the allocation of goods and services is determined primarily by government.

The production of goods and services is determined primarily by government, but the allocation of goods and services is determined primarily by markets.

The production and allocation of goods and services is determined primarily through markets.

The production and allocation of goods and services is determined primarily through government.
Question 6 (5 points)
 
Capitalism is an economic system that:
Question 6 options:

produces more capital goods than consumer goods.

produces more consumer goods than capital goods.

gives the government the right to tax individuals and corporations.

private individuals and corporations the right to own productive resources.
Question 7 (5 points)
 
In a market system, well-defined property rights are important because they:
Question 7 options:

reduce unnecessary investment.

limit destructive economic growth.

create economic problems.

encourage economic activity.
Question 8 (5 points)
 
If two goods are complements:
Question 8 options:

they are consumed independently.

an increase in the price of one will increase the demand for the other.

a decrease in the price of one will increase the demand for the other.

they are necessarily inferior goods.
Question 9 (5 points)
 
When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. In this range of prices, demand for this product is:
Question 9 options:

elastic.

inelastic.

cross-elastic.

unitary elastic.
Question 10 (5 points)
 
Demand can be said to be inelastic when:
Question 10 options:

an increase in price results in a reduction in total revenue.

a reduction in price results in an increase in total revenue.

a reduction in price results in a decrease in total revenue.

the elasticity coefficient exceeds one.
Question 11 (5 points)
 
Economic growth is shown by a shift of the production possibilities curve outward and to the right.
Question 11 options:

True

False
Question 12 (5 points)
 
The four factors of production are land, labor, capital, and government services.
Question 12 options:

True

False
Question 13 (5 points)
 
If demand increases and supply simultaneously decreases, equilibrium price will rise.
Question 13 options:

True

False
Question 14 (5 points)
 
Property rights have a positive effect in a market economy because they encourage owners to maintain their property.
Question 14 options:

True

False
Question 15 (5 points)
 
In the price range where demand is inelastic, a decrease in price will result in a decrease in total revenue.
Question 15 options:

True

False
Question 16 (5 points)
 
Price elasticity of supply decreases the longer the time period.
Question 16 options:

True

False
Question 17 (5 points)
 
Toothpaste and toothbrushes are substitute goods.
Question 17 options:

True

False
Question 18 (5 points)
 
A government-set price ceiling will lower equilibrium price and quantity in a market.
Question 18 options:

True

False
Demand for Shirts
 
Question 19 (5 points)
 
(Exhibit: Demand for Shirts) The price elasticity of demand for the segment AB is:
Question 19 options:

-13

-11

-0.91

-0.1
Question 20 (5 points)
 
(Exhibit: Demand for Shirts) The price elasticity of demand for the segment BC is:
Question 20 options:

greater than 3.33 (absolute value).

-3.33.

-3.

-0.33.
Question 21 (5 points)
 
(Exhibit: Demand for Shirts) The price elasticity of demand for the segment CD is:
Question 21 options:

greater than 1 (absolute value).

-1.

-0.71.

-0.29.
Markets and Efficiency
 
Question 22 (5 points)
 
(Exhibit: Markets and Efficiency) In panel (a):
Question 22 options:

the price of apples is $0.80 and the quantity demanded is Q1.

the equilibrium price ensures that quantity demanded will match quantity supplied.

the equilibrium price ensures that there will be neither surpluses nor shortages.

all of the above are true.
Question 23 (5 points)
 
(Exhibit: Markets and Efficiency) The equilibrium price in Panel (a) tells us that the marginal cost of a pound of apples is:
Question 23 options:

less than $0.80.

equal to $0.80.

greater than $0.80.

equal to the average cost of producing apples.
Question 24 (5 points)
 
(Exhibit: Markets and Efficiency) The price and marginal cost in Panel(a) are equal because of:
Question 24 options:

the marginal decision rule.

the law of demand.

the law of supply.

the law of increasing cost.
Question 25 (5 points)
 
(Exhibit: Markets and Efficiency) What is the marginal benefit to a producer of an extra pound of apples in Panel (a)?
Question 25 options:

It is the price the producer receives.

It is the price the consumer receives.

It is the price the producer pays.

It is all of the above.
Question 26 (5 points)
 
(Exhibit: Markets and Efficiency) What is the marginal cost of an extra pound of apples to a producer in Panel(a)?
Question 26 options:

It is greater than the price.

It is the value that must be given up to produce an extra pound of apples.

It must be less than the price.

It is the cost of the least satisfactory apples.
Question 27 (5 points)
 
(Exhibit: Markets and Efficiency) In Panel (b) demand shifted from D1 to D2, reflecting a change in consumer preferences. The price of apples will change to the new equilibrium price:
Question 27 options:

where the marginal benefit of apples is again equal to the marginal cost.

of $0.70.

where an efficient solution is again achieved.

that is described by all of the above.
Question 28 (20 points)
 
What effect on the price elasticity of demand for commuter rail is there likely to be from a decrease in the price of gasoline? Explain your answer.

BUSI570 ADE Week 4 Firm Financial Analysis Project Parts I-III Lowe's Company

Company:Lowe's Companies, Inc.

Develop an overview/history of the firm that you have chosen, as well as conduct an end-point financial analysis and working capital analysis.

Part I: Firm History and Overview (due Week 4)

Develop an overview/history of the firm that you have chosen, as well as the industry your firm operates in. You should include information that describes the market structure and competition in the industry, along with the position of your firm within this industry – i.e., is the firm one of the leaders or is it a niche player? Is the firm one of the medium-size firms in the industry? Part I will be worth 30 points.

Part II: End-Point Financial Analysis (due Week 4)

Using historical financial statements (income statements and balance sheets) for the firm, analyze the financial performance and changes to the firm over a ten-year time period using an end-point analysis framework similar to that used in the analysis of Coca-Cola (Week 1 dropbox assignment). You should calculate the same ratios and financial measures as were provided for the Coca-Cola case.

Next, you will identify the major changes in the firm's financial performance over this time period. Include an analysis of: 1) overall changes/growth in the firm's revenues, assets, and liabilities; 2) common-size statements; 3) ratio analysis; and 4) analysis using the DuPont model.

You will be required to provide the conclusions regarding which way the major ratio categories are trending. An acceptable conclusion might be, for example: "profitability has increased over the last five years as evidenced by increasing net margin and gross margin ratios. This is the result of a decrease in cost of goods sold, higher margins because of increased market share, etc." You should also research the notes to your company's 10K to determine the probable causes of these changes ("Leverage increased because the company issued $50M in bonds to pay for a plant expansion."). Part II will be worth 70 points.

Part III: Working Capital Analysis (due Week 4)

Using the same financial statements from your Financial Analysis (Part II), provide an analysis of the firm's working capital policy and changes to this policy over a ten-year period. Your working capital analysis should include the following: 1) overall level and change in WC over the time period and the factors that caused these changes; 2) calculation of the Cash Conversion Cycle for the beginning and ending period and a discussion of causal factors and implication of these changes; 3) overall assessment of the firm's working capital policy (i.e., is it conservative, moderate, or aggressive?). Compare your results to the firm's industry averages. Part III will be worth 40 points.

BUSI570 ADE Week 4 Discussion

This week's material covers two very important securities in finance--bonds and stocks. Our task will be to try to determine what is happening currently in bond and stock markets. You will have two tasks:

1. Find an article in a recent newspaper or business publication (within the last month) that discusses something concerning the bond market. This can be information on current bond values, current interest rates and Fed monetary policy, the global debt situation, the U.S. budget situation and its basis in debt funding, etc.. You should use nationally recognized sources for this article, such as The Wall Street Journal, The Financial Times, Business Week, etc. Identify the source of your information and provide a link. Describe and discuss the main points of this article and how this information could be useful to a financial manager.
2. Do the same for stocks--i.e., find an article about what is happening in the stock market. Again, identify your source and provide a link; describe and discuss the main points of this article; relate this information to the course.

Initial post due Friday by 11:59 pm CT. Two responses due Sunday by 11:59 pm CT.

 

BUSI570 ADE Week 3 Discussion 3

Our discussion this week will provide an opportunity for us to 'think and dream big' in a capital budgeting sense. Your task will be as follows:

1. Go to either of the following websites: www.ted.com or fora.tv. Both of these sites provide video presentations on a variety of topics, some of which deal with new innovations and ideas. Watch some of the videos that deal with new ideas/innovations and choose one that resonates with you.
2. Describe the idea for your classmates and provice a link to it. Try to capture the idea presented in the video in a capital budgeting framework. Try to identify the various costs of a project, the cash flows associated with it, etc. That is, if you were to translate the idea into a capital budgeting framework, how would you do it? What factors would you need to consider in your analysis? These will be very general in nature--not specific dollar amounts.
3. Describe any positive or negative externalities that might result from the project. (NOTE: externalities are benefits/costs outside of the original transaction--e.g., pollution control results in better health outcomes).

BUSI570 ADE Week 1 Discussion 1

We are all aware of the financial crisis that engulfed the economy during 2008.  Michael Lewis is the author of several books including Liar's Poker, Moneyball, The Big Short, and Boomerang.  He has written two very insightful articles detailing the reasons for the crisis and the ways to repair the system. 

Please read "The End of the Financial World as We Know It" and "How to Repair a Broken Financial World."   These articles were written in January of 2009. Discuss three (3) things you learned from the articles and share them with your classmates. 

In addition to reading the two Lewis articles linked above, please find one other article/video/ etc. on the financial crisis and summarize it for the class.  This information can come from articles (use reputable sources--NYT, WSJ, Financial Times, etc.), from videos, news programs, etc.  Several sources can be found in the Instructional Materials for Week One.

BUSI570 ADE Week 1 Assignment Review of Articles

Please read the articles Greed Cycle , Dumbest Idea in the World , and Maximizing Shareholder Value: The Goal That Changed Corporate America . After you have read them, write a 4-6 page paper addressing the following questions.

Greed Cycle Questions:

1. What has been the changing nature of the goal of the corporation?
2. What is the relationship between agency problems and the goal of shareholder wealth maximization?
3. What are successful and unsuccessful ways in which agency problems between managers and owners have addressed?
4. What is the relationship between agency conflicts and options given to managers?
5. What is your opinion of the best goal for corporations?

Dumbest Idea. . . Questions:

1. What is the Dumbest Idea?   Why?
2. How has the focus on SH wealth changed the way success is measured?
3. How has the time perspective been altered by the focus on SH wealth?
4. What alternative goals are suggested?

Maximizing Shareholder Value:  The Goal that . . . Questions:

1. What changes are described for IBM in this article?  Why?
2. Describe the philosophical changes that have occurred as a result of this change in goal.  How has this impacted behavior?
3. What about Social Responsibility?