Assignment 3: Long-Term Investment Decisions
Due Week 9 and worth 300 points
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 and Strayer databases 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
for your response.
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
economy to support your response.
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.
Final exam
Eco550 final exam part 1
Question 1
A ____ total cost function implies that marginal costs ____ as output is increased.
Answer
Question 2
Which of the following is not an assumption of the linear breakeven model:
Answer
Question 3
Break-even analysis usually assumes all of the following except:
Answer
Question 4
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.
Answer
Question 5
The degree of operating leverage is equal to the ____ change in ____ divided by the ____ change in ____.
Answer
Question 6
In the linear breakeven model, the breakeven sales volume (in dollars) can be found by multiplying the breakeven sales volume (in units) by:
Answer
Question 7
Long distance telephone service has become a competitive market. The average cost per call is $0.05 a minute, and it’s declining. The likely reason for the declining price for long distance service is:
Answer
Question 8
In the long-run, firms in a monopolistically competitive industry will
Answer
Question 9
In the purely competitive case, marginal revenue (MR) is equal to:
Answer
Question 10
An “experience good” is one that:
Answer
Question 11
Buyers anticipate that the temporary warehouse seller of unbranded computer equipment will
Answer
Question 12
Asset specificity is largest when
Answer
Question 13
In the short-run for a purely competitive market, a manufacturer will stop production when:
Answer
Question 15
Of the following, which is not an economic rationale for public utility regulation?
Answer
Question 16
____ as practiced by public utilities is designed to encourage greater usage and therefore spread the fixed costs of the utility’s plant over a larger number of units of output.
Answer
Question 17
In the electric power industry, residential customers have relatively ____ demand for electricity compared with large industrial users. But contrary to price discrimination, large industrial users generally are charged ____ rates.
Answer
Question 18
The demand curve facing the firm in ____ is the same as the industry demand curve.
Answer
Question 19
The practice by telephone companies of charging lower long-distance rates at night than during the day is an example of:
Answer
Question 20
In a kinked demand market, whenever one firm decides to lower its price,
Answer
Question 21
In the Cournot duopoly model, each of the two firms, in determining its profit-maximizing price-output level, assumes that the other firm’s ____ will not change.
Answer
Question 22
“Conscious parallelism of action” among oligopolistic firms is an example of ____.
Answer
Question 23
If a cartel seeks to maximize profits, the market share (or quota) for each firm should be set at a level such that the ____ of all firms is identical.
Answer
Question 24
A cartel is a situation where firms in the industry
Answer
Question 25
Barometric price leadership exists when
Answer
part II
Question 1
If one-time gains from defection are always less than the discounted present value of an infinite time stream of cooperative payoffs at some given discount rate, the decision-makers have escaped
Answer
Question 2
Credibility in threats and commitments in sequential games is based on
Answer
Question 3
A key to analyzing subgame perfect equilibrium strategy in sequential games is
Answer
Question 4
Consider the game known as the Prisoner’s Dilemma. What’s the dilemma?
Answer
Question 5
Non-cooperative sequential games can incorporate all the following features except
Answer
Question 6
Third-degree price discrimination exists whenever:
Answer
Question 7
Which of the following pricing policies best identifies when a product should be expanded, maintained, or discontinued?
Answer
Question 8
____ is the price at which an intermediate good or service is transferred from the selling to the buying division within the same firm.
Answer
Question 9
Firms that have a cover charge for their customers and charge for each item they purchase as well are exhibiting
Answer
Question 10
Electricity pricing that varies in its billing expense throughout the day is called
Answer
Question 12
Which of the following is not among the functions of contract?
Answer
Question 13
Mac trucks and their dealers would likely have an organizational form of
Answer
Question 14
When manufacturers and distributors establish credible commitments to one another, they often employ
Answer
Question 15
When retail bicycle dealers advertise and perform warranty repairs but do not deliver the personal selling message that Schwinn has designed as part of the marketing plan but cannot observe at less than prohibitive cost, the manufacturer has encountered a problem of ____.
Answer
Question 16
The sentiment for increased deregulation in the late 1970’s and early 1980’s has been felt most significantly in the price regulation of
Answer
Question 17
____ yields the same results as the theory of perfect competition, but requires substantially fewer assumptions than the perfectly competitive model.
Answer
Question 18
The lower the barriers to entry and exit, the more nearly a market structure fits the ____ market model.
Answer
Question 19
The antitrust laws regulate all of the following business decisions except ____.
Answer
Question 20
The ____ is equal to the some of the squares of the market shares of all the firms in an industry.
Answer
Question 21
Cost-benefit analysis is the public sector counterpart to ____ used in private, profit-oriented firms.
Answer
uestion 22
Which of the following should not be counted in a cost-benefit analysis?
Answer
Question 23
In determining the optimal capital budget, one should choose those project’s whose ____ exceeds the firm’s ____ cost of capital.
Answer
Question 24
In the constant-growth dividend valuation model, the required rate of return on common stock (i.e., cost of equity capital) can be shown to be equal to the sum of the dividend yield plus the ____.
Answer
Question 25
All of the following except ____ are shortcomings of cost-benefit analysis.
Answer
