Module 1 discussion
Every time we have to make a choice we are faced with an
opportunity cost. Using an example in your professional life, identify a
situation where you were presented with a choice, the opportunity cost of the
choice you made, and the process you used to make your choice. As part of your
discussion, explain whether or not responsible stewardship played a role in
your choice. Remember to use the appropriate economic concepts and terminology
that are applicable to your answer.
Module 2 discussion
What factors must a firm consider when deciding to raise or
lower its price? In answering this question think about the content in Chapters
4 and 5 and use a real-world example that helps illustrate your answer.
Module 3 discussion
View the video at the link below and share your thoughts on
the economic concepts that you believe are applicable. You can also view this
video by using the NBC Learn link in the student resources folder.
In your response, provide a rationale on whether or not a
firm has to possess market power in order to raise prices.
Module 4 discussion
If a firm has created value, is it also always able to
capture that value? How does a firm create value and then what must it be able
to do to capture that value? In your answer, provide an example of a firm that
has been able to create value. Then discuss whether or not you believe it has
captured that value and if so how it was captured and if not why it was not
able to do so.
Module 5 discussion
Identify an incentive conflict in your firm, or one you have
read about, that reduced firm value. As part of your answer, discuss whether or
not one or more of the legs of the organizational stool was unbalanced, and if
so, how that contributed to the conflict.
Module 6 discussion
Should decision management and decision control be
separated? As part of your discussion, provide a real-world example (or provide
a fictitious example) of a firm where the control (correctly) resides with the
same individual as well as an example of a firm where the control is
(correctly) separated.
Module 7 discussion
W. Edwards Deming, often referred to as the leading quality
guru in the United States, and psychologist Alfie Kohn support the idea that
incentive pay is not a motivator for individuals to do a good job. Yet
economists argue that incentive compensation does work and as economist George
Baker notes in his 1993 article in the Harvard Business Review titled
“Rethinking Rewards,” “The problem is not that incentives can’t
work but that they work too well.” What does Baker mean? Discuss the
importance of a well-developed compensation plan in attracting and retaining
good employees and how to keep those plans from “working too well.”
Module 8 discussion
Describe an experience that you have had working on a team.
As part of your response discuss how the team was evaluated. Also discuss
whether or not the free-rider problem existed on your team. If it did exist
also discuss how/if the problem was addressed. If the problem did not exist
discuss why not or how the problem was managed.
Module 1 case
assignment
For each module you will need to complete case study
questions from your text Managerial Economics And Organizational Architecture.
Read the scenario provided in the text and then answer the questions provided.
Please see your syllabus for more information.
Chapter 2 “Analyzing Managerial Decisions: Interwest
Healthcare Corp.”
Chapter 3 “Analyzing Managerial Decisions: Nobel Prize
winner F.A. Hayek on the ‘Miracle’ of the Price System”
Module 2 case
assignment
For each module you will need to complete case study
questions from your text Managerial Economics And Organizational Architecture.
Read the scenario provided in the text and then answer the questions provided.
Please see your syllabus for more information.
Chapter 4 – “Analyzing Managerial Decisions: Setting Tuition
and Financial Aid”
Chapter 5 – “Analyzing Managerial Decisions: Rich
Manufacturing”
Module 3 case
assignment
For each module you will need to complete case study
questions from your text Managerial Economics And Organizational Architecture.
Read the scenario provided in the text and then answer the questions provided.
Please see your syllabus for more information.
Chapter 6 – “Analyzing Managerial Decisions: United Airlines”
Chapter 7 – “Analyzing Managerial Decisions: iTunes Music
Pricing”
Module 4 case
assignment
For each module you will need to complete case study
questions from your text Managerial Economics And Organizational Architecture.
Read the scenario provided in the text and then answer the questions provided.
Please see your syllabus for more information.
Chapter 8 – “Analyzing Managerial Decisions: Leaving
New York City for the Farmlands of Illinois”
Module 5 case
assignment
For each module you will need to complete case study
questions from your text Managerial Economics And Organizational Architecture.
Read the scenario provided in the text and then answer the questions provided.
Please see your syllabus for more information.
Chapter 10 – “Analyzing Managerial Decisions: eBay.com”
Chapter 11 – “Analyzing Managerial Decisions: Tipping in
Restaurants”
Module 6 case
assignment
For each module you will need to complete case study
questions from your text Managerial Economics And Organizational Architecture.
Read the scenario provided in the text and then answer the questions provided.
Please see your syllabus for more information.
Chapter 12 – “Analyzing Managerial Decisions: Medford
University”
Chapter 13 – “Analyzing Managerial Decisions: Bagby Copy
Company”
Module 7 case
assignment
For each module you will need to complete case study
questions from your text Managerial Economics And Organizational Architecture.
Read the scenario provided in the text and then answer the questions provided.
Please see your syllabus for more information.
Chapter 14 – “Analyzing Managerial Decisions: Structuring
Compensation Plans”
Module 8 case assignment
For each module you will need to complete case study
questions from your text Managerial Economics And Organizational Architecture.
Read the scenario provided in the text and then answer the questions provided.
Please see your syllabus for more information.
Chapter 16 – “Analyzing Managerial Decisions: Why Teams
Fail”
Mid-term Exam
1. (10 pts.) Stella Ann Freeman is having a difficult time
deciding whether or not to purchase a new car. How would understanding the
concept of opportunity costs help her make a decision?
2. (10 pts.) Referring to the table below, hiring a driver
costs $10. Each machine costs $100. Which method should he use and why?
3. (10 pts.) Enron will be an example of a dysfunctional
company for many years to come. It was clearly a company riddled with fraud and
excess and its conduct drove it into bankruptcy. The text argues that
individual behavior was not at the core of Enron’s problems. What were the
problems with this corporation from an organizational architecture point of view?
4. (10 pts.) For many corporations such as utility
companies, a major portion of the cost of production is fixed in the short run.
Should these very large fixed costs be ignored when the executives are making
output and pricing decisions? Why?
5. (10pts.) Choose a real-life example of a firm that you
think is part of an oligopoly market and describe the characteristics of the
market structure that explain why the firm would be classified as such.
6. (10 pts.; 2 pts each) You are the manager for Dunkin Donuts
and know the following elasticities:
?= 1.5 ?I = 1.2 ? xy1 = 0.5 ? xy2 = -0.5
? is the price elasticity of demand for Dunkin Donuts (DD)
glazed doughnuts, ?xy1is the cross elasticity of demand between DD glazed
doughnuts and Krispy Kreme (KK) glazed doughnuts, ?xy2is the cross elasticity
of demand between DD glazed doughnuts and DD French Vanilla coffee, and ?I is
the income elasticity of DD glazed doughnuts.
a) If you
want to increase your sales of glazed doughnuts by 30%, in what direction and by
how much do you need to change the price?
b) If you
make the percentage price change that you calculated in part a) will total
revenue increase or decrease? How do you
know?
c) Krispy
Kreme lowers its price of glazed doughnuts by 20%. The demandforDunkin Donuts glazed doughnuts
will change by what percentage and in what direction?
d) Dunkin
Donuts raises the price of its French Vanilla coffee by 15%. The demand for
Dunkin Donuts glazed doughnuts will change by what percentage and in what
direction?
e) If
average income increases by 5% by what percentage and in what direction will
the demand for Dunkin Donuts glazed doughnuts change? Are DD glazed doughnuts a
normal good or an inferior good and how do you know?
7. (10 pts.) Westinghouse and General Electric are competing
on the newest version of clothes washer and dryer combinations. Two pricing
strategies exist: price high or price low. The profit from each of the four
possible combinations of decisions is given in the following payoff matrix:
Westinghouse’s price
High
($4000) Low ($2000)
General Electric’s
price High ($4000)
Low ($2000)
Payoffs
in dollars of profit.
a) (2 pts.) Which strategy offers both Westinghouse and
General Electric the best financial outcome?
b) (2 pts.) Does
either firm have a dominant strategy? If yes, which firm and what strategy?
c) (4 pts.) The Nash equilibrium is for Westinghouse to set
its price at __________ and earn a profit of __________ and for General
Electric to set its price at ______________ and earn a profit of _____________.
d) (2 pts.) Why do we see that the strategy that results is
not the strategy that offers both players the best financial outcome?
Final Exam
1. (10 pts.) Discuss how organizational architecture and
corporate culture are related. Use an example of a real-life firm and discuss
how its corporate culture blends with its organizational architecture.
2. (10 pts.) Billy Riggan is in charge of all technical
developments at Always Round Tire. He makes all the choices concerning product
innovations in the company. He finds that he is overworked and that several of
his research scientists seem to be spending work hours playing tennis. What is
going on?
3. (10 pts.) Always Round Tire tries to base its promotions
on seniority (where education and training requirements are not necessary). The
company finds that this system seems to work most of the time with shop floor
supervisors and team managers. But the system breaks down for higher-level
positions. Why?
4. (10 pts.) Economists believe the free rider problem is
very important in complex business organizational structures. Still, businesses
continue to build teams to solve problems or to deliver products to consumers.
Often special rewards or bonuses are provided to the team rather than to the
individuals on the team. Write a brief essay that either defends the
economists’ concern or explain why economists are wrong on this issue.
5. (10 pts.) Many firms today use 360-degree performance
evaluations. Make a case for this type of evaluation based on the
informativeness principle. What problems may be encountered from implementation
of such a system?
6. (10 pts.) Reflecting on what you have learned in this
course, discuss the relevance of Responsible Stewardship in the context of
economic analysis and organizational architecture.
Module 7 Term Paper
Term Paper: A final paper that focuses on the course
content, applied in the setting of your current or past employer, will be due
in Module 7. In this paper you will focus on the following:
1. Provide a description of the company that you work for.
As part of your description include a
discussion of the type of organizational structure.
2. Describe an agency problem within the firm and discuss
what you think is causing the problem
and how the problem might be better controlled.
3. Describe the job dimensions of the firm and discuss
whether or not you believe the current design
is appropriate for the firm. Discuss any suggestions you
might have for improving the job design.
Grouped by function or by product or geography or a matrix
organization? Provide a diagram if
helpful to illustrate. Is this organization effective?
4. Describe the compensation package for executives and
employees within the firm. Discuss
whether or not you believe that the compensation package is
effective and any suggestions that
you might have for improving the compensation package.
While these questions focus on the latter half of the
course, you should remain mindful of the economic
concepts that were developed in the beginning of the course.
An “A” paper will demonstrate a thorough
understanding of the relevant topics, completely discuss
each of the four points of the paper, use
terminology appropriate to the topic, and use word choice,
spelling, and sentence structure appropriate
for graduate-level work.
Specific Formatting Instructions
1. All assignments must be completed as Word documents. If
you do not have Word you can
use Microsoft WordPad and use the rich text format (.rtf
extension).
2. All assignments must be prepared in the APA format,
including references.
3. Cover page. Use a single cover page that contains:
a. the title of the assignment
b. your name
4. Margins. All page margins should be the default margins
for your word processing program.
Use only the LEFT margin justification setting.
5. Page numbering. Please use page numbering for all pages
except the cover page.
6. Spacing/Font. All papers should be single-spaced only
(this includes spacing between
paragraphs) and a 12 point font.
7. Direct quotes/ paraphrasing. Direct quotes and
paraphrasing MUST be referenced and cited
using APA guidelines. Although there is no limit on how many
citations are in the paper, I will
use limits of 15% for quotations and 25% for unoriginal
wording for this course. When more
than one quarter of a paper seems to be unoriginal, it
usually indicates a problem. Even if
sources are properly cited and some of the words are
changed, it raises the question of how
much original thinking went into the paper. There is a big
difference between starting with a
blank page and writing your own thoughts, and building the
paper around quotes,
paraphrased sources, and the altered wording of another
author. You are encouraged to use
textbook concepts as you attempt to explain in your own
words the answers to the
assignments rather than relying heavily on quoted material.
Try to think about how you would
explain your answer to someone who has not taken a
managerial economics class. High
scores on the originality report in Turnitin are not just a
result of plagiarism; they can also
result from an incorrect quotation/citation methodology or
from using words that have been
rearranged from your sources. If you use someone else’s work
you must cite and reference it
appropriately.
8. References. You must include a separate References page
in APA format with each paper.
Any source that is used to develop your paper must be
included in this section.
9. File Name. The file that you submit to the Assignment box
is the one that your instructor will grade. To facilitate the grading process,
please save your file name as lastname_assignment name (e.g., caldwell_chapter
1 case study) so that when you upload the file it will be obvious to me who the
file is from once it is downloaded for grading.
Use of Turnitin: You will be submitting your term paper to
an Assignment box that is linked to Turnitin.
For those of you not familiar with Turnitin, it is a
plagiarism identification service that can also assist students with term paper
reference methodology. The Turnitin tool compares your writing against all published
sources and also checks against prior class papers. You must cite all your
source material including direct quotations, paraphrasing, and statements of
fact. Click the Turnitin link under Resources in the course menu to download
additional information on how the integration with the Assignment box works
Module 1 quiz
Question 1
The example of Enron shows that:
large incentives are the keys to
getting people moving in a corporation.
business success is possible in a
regulatory environment.
selection of people is the key to
organizational success or failure.
organizational
structure is extremely important in business success.
Question 2
If the technology, the nature of competition, or the
regulatory environment changes in an industry, then:
organizations are created by
random events, just like markets.
a good organizational
architecture is always able to cope with changes.
the
appropriate organizational architecture will change too.
organizational architecture is
able to restore the former market environment.
Question 3
Economics provides a theory to explain:
how managers can cheat and get
away with it.
how a successful business can be
started.
how to
compete in the market.
how
people make choices.
Question 4
Benchmarking means:
copying
from the best so as to become better.
blind copying.
looking at yourself and telling
yourself you are the greatest.
looking at yourself and telling
others what to do.
Question 5
A risk-averse agent:
only
cares about expected payoff.
always prefers a certain payoff
to a risky one.
cares
about expected payoff, as well as the variability of a payoff.
only cares about the variability
of a payoff.
Question 6
If employees conform to the economist’s view of behavior,
managers will be most effective if they can:
influence
the costs and benefits of employee actions.
fire bad employees.
improve employee satisfaction
with the job.
communicate
goals and objectives effectively to their employees.
Question 7
Marginal utility is the:
total amount spent to purchase
one additional unit.
total happiness obtained from a
consumption bundle.
additional
utility obtained by consuming one additional unit.
additional utility obtained by
lowering the price of a good.
Question 8
Assume the market for ceiling fans is perfectly competitive
and currently in equilibrium. If the demand increases while the supply
decreases, then:
Correct Answer
we can
be certain the equilibrium price will increase.
both price and quantity will
decrease.
we can be certain the equilibrium
quantity will increase.
both
price and quantity will increase.
Question 9
Assume the government introduces a $0.50 per gallon tax on
gasoline. Which of the following is true?
The quantity of gasoline sold is
likely to increase.
The
quantity of subway and bus tickets sold is likely to increase.
The quantity supplied by
producers will decrease.
The quantity of cars sold is
likely to increase.
Question 10
According to Ronald Coase, for a free-market economy to work
efficiently, there needs to be:
a well-developed tax code.
an
allocation of private property rights with low transactions costs.
an allocation of private property
rights with high transactions costs.
a low cost of malpractice
insurance.
Question 11
Based on the following diagram if there was a $3.00 price
floor:
there would be a surplus of 30.
the quantity demanded would be 65.
there would be a shortage of 30.
the quantity demanded would be 30.
Question 12
Assume D1 represents the current demand curve for skis.
Which of the following would be likely to cause D1 to shift to D2?
A decrease in the price of skis.
An increase in the price of skis.
An increase in the price of snowboards.
An increase in the price of ski boots and clothing.
