# ECO 550 Complete Class

Product DescriptionECO 550 Complete ClassECO 550 Week 3 Assignment 1 – Demand Estimation Imagine that you work for the maker of a leading brand of low-calorie microwavable food that estimates
the following demand equation for its product using data from 26 supermarkets around the country for the
month of April.
For a refresher on independent and dependent variables, please go to Sophia’s Website and review the
Independent and Dependent Variables tutorial, located at http://www.sophia.org/tutorials/independentand-
dependent-variables–3.
Note: Your professor will provide you with the equation and data necessary for you to complete this
assignment. You will find this information attached to Assignment 1 within the course shell.
Write a four to six (4-6) page paper in which you:
1. Compute the elasticities for each independent variable. Note: Write down all of your calculations.
2. Determine the implications for each of the computed elasticities for the business in terms of shortterm
and long-term pricing strategies. Provide a rationale in which you cite your results.
3. Recommend whether you believe that this firm should or should not cut its price to increase its
market share. Provide support for your recommendation.
4. Assume that all the factors affecting demand in this model remain the same, but that the price
has changed. Further assume that the price changes are 100, 200, 300, 400, 500, 600 dollars.
a) Plot the demand curve for the firm.
b) Plot the corresponding supply curve on the same graph using the supply function Q =
5200 + 45P with the same prices.
c) Determine the equilibrium price and quantity.
d) Outline the significant factors that could cause changes in supply and demand for the
product. Determine the primary manner in which both the short-term and the long-term
changes in market conditions could impact the demand for, and the supply, of the
product.
5. Indicate the crucial factors that could cause rightward shifts and leftward shifts of the demand and
supply curves.
6. Use at least three (3) quality academic resources in this assignment. Note: Wikipedia does not
qualify as an academic resource.ECO 550 Week  6 Assignment 2 – Operations Decisions Using the regression results and the other computations from Assignment 1, determine the market
structure in which the low-calorie food company operates.
Use the Internet to research two (2) of the leading competitors in the low-calorie microwavable food
industry, and take note of their pricing strategies, profitability, and their relationships within the industry
(worldwide).
Write a six to eight (6-8) page paper in which you:
1. Outline a plan that will assess the effectiveness of the market structure for the company’s
operations.
2. Suppose the business operations have now changed from the market structure specified in the
scenario. Determine two (2) likely factors that might have caused the change. Predict the primary
manner in which this change would likely impact business operations in the new market
environment.
3. Analyze the major short-run and long-run production and cost functions for the low-calorie
microwaveable food company. Suggest substantive ways in which the low-calorie food company
may use this information in order to make decisions in both the short-run and the long run.
4. Determine the possible circumstances under which the company should discontinue operations.
Suggest key actions that management should take in order to confront these circumstances.
Provide a rationale for your response.
5. Suggest one (1) pricing policy that will enable your low-calorie microwavable food company to
maximize profits. Provide a rationale for your suggestion.
6. Outline a plan, based on the information provided in the scenario, that the company could use in
order to evaluate its financial performance. Consider all the key drivers of performance, such as
company profit or loss for both the short term and long term, and the fundamental manner in
which each factor influences managerial decisions.
7. Recommend two (2) actions that the company could take in order to improve its profitability and
deliver more value to its stakeholders. Outline, in brief, a plan to implement your
recommendations.
8. Use at least five (5) quality academic resources in this assignment. Note: Wikipedia does not
qualify as an academic resource.ECO 550 Week 9 Assignment 3 – Long-Term Investment Decisions Assume that the low-calorie microwavable food company from Assignments 1 and 2 wants to expand and
has to make some long-term capital budgeting decisions.
Use the Internet to research government policies and regulation.
Write a six to eight (6-8) page paper in which you:
1. Outline a plan that managers in the low-calorie microwaveable food company could follow when
selecting pricing strategies for making their products as inelastic as possible. Provide a rationale
2. Examine the major effects that government policies have on production and employment. Predict
the potential effects that government policies could have on your company.
3. Determine whether or not government regulation to ensure fairness in the low-calorie
microwavable food industry is needed. Cite the major reasons for government involvement in a
market economy. Provide two (2) examples of government involvement in a similar market
4. Examine the major complexities that would arise under expansion via capital projects. Propose
key actions that the company could take in order to prevent or address these complexities.
5. Suggest the substantive manner in which the company could create a convergence between the
interests of stockholders and managers. Indicate the most likely impact to profitability of such a
convergence. Provide two (2) examples of instances that support your response.
6. Use at least five (5) quality academic resources in this assignment. Note: Wikipedia does not
qualify as an academic resource.ECO 550 WK 5 Midterm Exam MULTIPLE CHOICE1. The form of economics most relevant to managerial decision-making within the firm is:
a. macroeconomics
b. welfare economics
c. free-enterprise economics
d. microeconomics
e. none of the above2. If one defines incremental cost as the change in total cost resulting from a decision, and incremental revenue as the change in total revenue resulting from a decision, any business decision is profitable if:
a. it increases revenue more than costs or reduces costs more than revenue
b. it decreases some costs more than it increases others (assuming revenues remain constant)
c. it increases some revenues more than it decreases others (assuming costs remain constant)
d. all of the above
e. b and c only3. In the shareholder wealth maximization model, the value of a firm’s stock is equal to the present value of all expected future ____ discounted at the stockholders’ required rate of return.
a. profits (cash flows)
b. revenues
c. outlays
d. costs
e. investments4. Which of the following statements concerning the shareholder wealth maximization model is (are) true?
a. The timing of future profits is explicitly considered.
b. The model provides a conceptual basis for evaluating differential levels of risk.
c. The model is only valid for dividend-paying firms.
d. a and b
e. a, b, and c5. According to the profit-maximization goal, the firm should attempt to maximize short-run profits since there is too much uncertainty associated with long-run profits.
a. true
b. false6. According to the innovation theory of profit, above-normal profits are necessary to compensate the owners of the firm for the risk they assume when making their investments.
a. true
b. false7. According to the managerial efficiency theory of profit, above-normal profits can arise because of high-quality managerial skills.
a. true
b. false8. Which of the following (if any) is not a factor affecting the profit performance of firms:
a. differential risk
b. innovation
c. managerial skills
d. existence of monopoly power
e. all of the above are factors9. Agency problems and costs are incurred whenever the owners of a firm delegate decision-making authority to management.
a. true
b. false10. Economic profit is defined as the difference between revenue and ____.
a. explicit cost
b. total economic cost
c. implicit cost
d. shareholder wealth
e. none of the above11. Income tax payments are an example of ____.
a. implicit costs
b. explicit costs
c. normal return on investment
d. shareholder wealth
e. none of the above12. Various executive compensation plans have been employed to motivate managers to make decisions that maximize shareholder wealth. These include:
a. cash bonuses based on length of service with the firm
b. bonuses for resisting hostile takeovers
c. requiring officers to own stock in the company
d. large corporate staffs
e. a, b, and c only13. The common factors that give rise to all principal-agent problems include the
a. unobservability of some manager-agent action
b. presence of random disturbances in team production
c. the greater number of agents relative to the number of principals
d. a and b only
e. none of the above14. The Saturn Corporation (once a division of GM) was permanently closed in 2009. What went wrong with Saturn?
a. Saturn’s cars sold at prices higher than rivals Honda or Toyota, so they could not sell many cars.
b. Saturn sold cars below the prices of Honda or Toyota, earning a low 3% rate of return.
c. Saturn found that young buyers of Saturn automobiles were very loyal to Saturn and GM.
d. Saturn implemented a change management view that helped make first time Saturn purchasers trade up to Buick or Cadillac.
e. all of the above15. A Real Option Value is:
a. An option that been deflated by the cost of living index makes it a “real” option.
b. An opportunity cost of capital.
c. An opportunity to implement cost savings or revenue expansion in a flexible business plan.
d. An objective function and a decision rule that comes from it.
e. Both a and b.16. Which of the following will increase (V0), the shareholder wealth maximization model of the firm:
V0∙(shares outstanding) = S¥t=1 (p t ) / (1+ke)t + Real Option Value.
a. Decrease the required rate of return (ke).
b. Decrease the stream of profits (pt).
c. Decrease the number of periods from ¥ to 10 periods.
d. Decrease the real option value.
e. All of the above.17. The primary objective of a for-profit firm is to ___________.
a. maximize agency costs
b. minimize average cost
c. maximize total revenue
d. set output where total revenue equals total cost
e maximize shareholder value18. Possible goals of Not-For-Profit (NFP) enterprises include all of the following EXCEPT:
a. maximize total costs
b. maximize output, subject to a breakeven constraint
c. maximize the happiness of the administrators of the NFP enterprise
d. maximize the utility of the contributors
e. a. and c.19. The flat-screen plasma TVs are selling extremely well. The originators of this technology are earning higher profits. What theory of profit best reflects the performance of the plasma screen makers?
a. risk-bearing theory of profit
b. dynamic equilibrium theory of profit
c. innovation theory of profit
d. managerial efficiency theory of profit
e. stochastic optimization theory of profit20. To reduce Agency Problems, executive compensation should be designed to:
a. create incentives so that managers act like owners of the firm.
b. avoid making the executives own shares in the company.
c. be an increasing function of the firm’s expenses.
d. be an increasing function of the sales revenue received by the firm.
e. all of the above21. Recently, the American Medical Association changed its recommendations on the frequency of pap-smear exams for women. The new frequency recommendation was designed to address the family histories of the patients. The optimal frequency should be where the marginal benefit of an additional pap-test:
a. equals zero.
b. is greater than the marginal cost of the test
c. is lower than the marginal cost of an additional test
d. equals the marginal cost of the test
e. both a and b.22. Shirking of one’s duties is often encountered in team production settings because
a. few individuals are well-intentioned
b. teamwork is recognized as less significant than individual performance
c. teammates face a dilemma posed by a dominant strategy to shirk
d. reputation effects dominate in long-term teams
e. teamwork can be less than the sum of the individual parts23. The moral hazard in team production arises from
a. poorly designed team membership
b. lack of proper assignment of individual tasks
c. disorganization in groups
d. a conflict between tactically best interest and one’s duty
e. insufficient experienceAll Questions are Included.ECO 550 Week 11 Final Exam MULTIPLE CHOICE1. Evidence from empirical studies of long-run cost-output relationships lends support to the:
a. existence of a non-linear cubic total cost function
b. hypothesis that marginal costs first decrease, then gradually increase over the normal operating range of the firm
c. hypothesis that total costs increase quadratically over the ranges of output examined
d. hypothesis that total costs increase linearly over some considerable range of output examined
e. none of the above2. The short-run cost function is:
a. where all inputs to the production process are variable
b. relevant to decisions in which one or more inputs to the production process are fixed
c. not relevant to optimal pricing and production output decisions
d. crucial in making optimal investment decisions in new production facilities
e. none of the above3. Theoretically, in a long-run cost function:
a. all inputs are fixed
b. all inputs are considered variable
c. some inputs are always fixed
d. capital and labor are always combined in fixed proportions
e. b and d4. Break-even analysis usually assumes all of the following except:
a. in the short run, there is no distinction between variable and fixed costs.
b. revenue and cost curves are straight-lines throughout the analysis.
c. there appears to be perfect competition since the price is considered to remain the same re-gardless of quantity.
d. the straight-line cost curve implies that marginal cost is constant.
e. both c and d5. What is another term meaning the degree of operating leverage?
a. The measure of the importance of fixed cost.
b. The operating profit elasticity.
c. The measure of business risk.
d. D.O.L.
e. All of the above.6. In a study of banking by asset size over time, we can find which asset sizes are tending to become more prominent. The size that is becoming more predominant is presumed to be least cost. This is called:
a. regression to the mean analysis.
b. breakeven analysis.
c. survivorship analysis.
d. engineering cost analysis.
e. a Willie Sutton analysis.7. George Webb Restaurant collects on the average \$5 per customer at its breakfast & lunch diner. Its variable cost per customer averages \$3, and its annual fixed cost is \$40,000. If George Webb wants to make a profit of \$20,000 per year at the diner, it will have to serve__________ customers per year.
a. 10,000 customers
b. 20,000 customers
c. 30,000 customers
d. 40,000 customers
e. 50,000 customers8. Which of the following is not a limitation of the survivor technique for measuring the optimum size of firms within an industry?
a. since the technique does not employ actual cost data in the analysis, there is no way to assess the magnitude of the cost differentials between firms of varying size and efficiency.
b. the managerial and entrepreneurial aspects of the production process are not included in the analysis
c. because of legal factors, the long-run cost curve derived by this technique may be distorted and may not measure the cost curve postulated in economic theory
d. a and b
e. b and c9. The primary disadvantage of engineering methods for measuring cost functions is that they deal with the managerial and entrepreneurial aspects of the production process or plant.
a. true
b. false10. A linear total cost function implies that:
a. marginal costs are constant as output increases
b. average total costs are continually decreasing as output increases
c. a and b
d. none of the above11. A ____ total cost function implies that marginal costs ____ as output is increased.
a. linear; increase linearly
c. cubic; increase linearly
d. a and b
e. none of the above12. A ____ total cost function implies that marginal costs ____ as output is increased.
a. linear; increase linearly
c. cubic; increase linearly
d. linear; are constant
e. none of the above13. A ____ total cost function yields a U-shaped average total cost function.
a. cubic
c. linear
d. a and b only
e. a, b, and c14. In the linear breakeven model, the difference between selling price per unit and variable cost per unit is referred to as:
a. variable margin per unit
b. variable cost ratio
c. contribution margin per unit
d. target margin per unit
e. none of the above15. Which of the following is not an assumption of the linear breakeven model:
a. constant selling price per unit
b. decreasing variable cost per unit
c. fixed costs are independent of the output level
d. a single product (or a constant mix of products) is being produced and sold
e. all costs can be classified as fixed or variable16. In the linear breakeven model, the breakeven sales volume (in dollars) is equal to fixed costs divided by:
a. unit selling price less unit variable cost
b. contribution margin per unit
c. one minus the variable cost ratio
d. a and b only
e. a, b, and c17. The degree of operating leverage is equal to the ____ change in ____ divided by the ____ change in ____.
a. percentage; sales; percentage; EBIT
b. unit; sales; unit; EBIT
c. percentage; EBIT; percentage; sales
d. unit; EBIT; unit; sales
e. none of the above18. The linear breakeven model excludes ____ from the analysis.
a. financing costs
b. taxes
c. contribution margin
d. a and b only
e. a, b, and c19. In the linear breakeven model, the relevant range of output is that range where the linearity assumptions of the model are assumed to hold.
a. true
b. false20. In the linear breakeven model, the breakeven sales volume (in dollars) can be found by multiplying the breakeven sales volume (in units) by:
a. one minus the variable cost ratio
b. contribution margin per unit
c. selling price per unit
d. standard deviation of unit sales
e. none of the above21. In the linear breakeven model, a firm incurs operating losses whenever output is less than the breakeven level.
a. true
b. false
All Questions are Included…ECO 550 Exams Package – Includes All Exams