bus530 all module cases & slps latest 2017

October 23, 2025 Claire B 0 Comments

Module 1 – Case

THE DEMAND AND SUPPLY MODEL

Case Assignment

The Case assignment is performed using information on a
company of your choice that is publicly traded in the stock market. If you are
unsure which company to choose, you can look through the list of companies in
the S&P 500 at the Yahoo Finance Portal (http://finance.yahoo.com/q/cp?s=%5EGSPC)
or choose from a list of companies provided in the Appendix. Search the
company’s website and obtain information about the company’s products, their
markets, their recent price, revenue and profit history, and the main
characteristics of the industry the company operates.

Using this information, write a 4 to 5 page paper commenting
on two of the following four questions:

Government regulators are concerned with market power. Does
your company have market power? Or does
your company operate in a competitive market? If so, provide a few examples.

Does your company operate using only a price strategy, or
does it employ other strategies, such as advertising and product
differentiation? If so, explain why and provide a few examples.

Do prices and other incentives play a significant role in
your company? If so, explain why and provide a few examples. For example, how
is the CEO of your company compensated? Salary only? Salary and bonuses? Salary
and stock options? What is the reason for these alternative arrangements?

Your company wants to increase its total revenue. One
strategy is to offer a 10% discount. Your company, however, knows that its
customers can be divided into two distinct groups according to their likely responses
to the discount. The accompanying table shows how the two groups respond to the
discount.

Group A Group B

(sales per
week) (sales per week)

Sales
before the 10% discount
1.55 million 1.50
million

Sales
after the 10% discount
1.65 million 1.70 million

Using this information, and your knowledge of the
relationship between total revenue and price elasticity of demand, compute
using the midpoint method, the price elasticity of demand for Group A and Group
B and explain how the discount will
affect total revenue from Group A and Group B.
If your company want to increase its total revenue, should the 10%
discount be offered to Group A only, to Group B only, to neither Group, or to
both Groups? For simplicity, assume in both cases that the price before the
discount is $100, and after the discount is $90. For the computations of the
arc elasticity of demand, please refer to the The Demand and Supply Model
handout and Price Elasticity of Demand handout.

Assignment Expectations

In the Module 1 Case Assignment, you are expected to:

Describe the purpose of the paper and provide a conclusion.

Present information in a professional manner.

Answer the Case Assignment questions clearly and provide
necessary details.

Write clearly and correctly—that is, no poor sentence
structure, no spelling and grammar mistakes, and no run-on sentences.

Provide citations to support your argument and place
references on a separate page. (All the sources that you listed in the
references section must be cited in the paper.) Use APA format to provide
citations and references [http://owl.english.purdue.edu/owl/resource/560/01/].

Type and double-space the paper.

Whenever appropriate, please use Excel to show supporting
computations in an appendix, present economic information in tables, and use
the data to answer follow-up questions.

Module 1 – SLP

THE DEMAND AND SUPPLY MODEL

Managerial economics utilizes tools from economic theory and
econometrics to derive optimal solutions to managerial decision problems.

Read the background material and then write a 3 to 4 page
report describing the diverse tools that managerial economics uses to derive
optimal solutions, i.e., explain, using a variety of examples, the main tools
of economic theory (the theory of markets, the role of prices, and the drive to
profit maximization). Then express your views on the following questions:

Are these concepts, tools and methodologies universal? That
is, do they apply to any institutions? For example, do they apply to the
military? Or to City Hall? If not, should they?

Can a company that operates in the market afford to be
inefficient (i.e., to waste resources)? For how long? What about the military?
Or City Hall? That is, what are the forces and incentives that, in your
opinion, are present in the market and absent in the military and in City Hall?

SLP Assignment Expectations

In the Module 1 SLP Assignment, you are expected to:

Describe the purpose of the paper and provide a conclusion.

Present information in a professional manner.

Answer the SLP Assignment question clearly and provide
necessary details.

Write clearly and correctly—that is, no poor sentence
structure, no spelling and grammar mistakes, and no run-on sentences.

Type and double-space the paper.

Whenever appropriate, please use Excel to show supporting
computations in an appendix, present economic information in tables, and use
the data to answer follow-up questions.

Module 2 – Case

PRODUCTION AND COST ANALYSIS

Case Assignment

The following table gives the total weekly output of
bicycles at Al’s Bicycle Town.

Table 1

Labor Total
Product (TP) Average Product of labor
(AP) Marginal Product of labor (MP)

0 0 na
na

1 100 100
100

2 300 —–
___

3 450 ___
___

4 ___ ___
110

5 630 ___ ___

6 ___ 110
___

Complete this table.

Draw the graphs of the marginal product (MP) and the average
product (AP).

To learn how to plot the data in Excel, see https://www.youtube.com/watch?v=B3U9tDcoNeI

Where do the AP and MP curve cross?

The cost of 1 worker is $2000 per month. Total fixed cost is
$4000 per month.

Complete Table 2 using your answers from Table 1 and by
computing total variable cost (TVC) and total cost(TC).

Table 2

Labor Total
Product (TP) Total variable cost
(TVC) Total cost (TC)

0 0 na
4000

1 100 2000
___

2 300 —–
___

3 450 ___
___

4 ___ ___
12000

5 630 ___ ___

6 ___ 12000
___

Draw the graphs of the TC and TVC curves. What is the
relationship between these two curves?

Complete Table 3 by using your answers from the previous
Tables and calculating the AVC, ATC, and MC.

Table 3

Total Product (TP)
Average variable cost (AVC) Average total cost (ATC) Marginal cost (MC)

0 na na na

100 20 ___ 20

300 —– ___ ___

450 ___ ___ ___

___ ___ 21.43 ___

630 ___ ___ ___

___ ___ ___ 66.67

Draw the graphs of the ATC, AVC, and MC curves. What is the
relationship between the ATC and AVC curves? Between the MC and AVC curves?

Suppose that Al discovers new technology that boosts the
productivity of his workers, so that more bicycles can be produced than before.

Complete Table 4, which presents production data with the
new technology.

Table 4

Labor Total Product
(TP) Average Product of labor (AP) Marginal Product of labor (MP)

0 0 na
na

1 120 120 120

2 360 —–
___

3 540 ___
___

4 672 ___
___

5 756 ___
___

6 792 ___
___

Al’s fixed cost remains at $4000, and he can continue to
hire workers at the monthly rate of $2000.

Use the new technology data to complete Tables 5 and 6.

Table 5

Labor Total
Product (TP) Total variable cost
(TVC) Total cost (TC)

0 0 na
___

1 120 ___ ___

2 360 —–
___

3 540 ___
___

4 672 ___
___

5 756 ___
___

6 792 ___
___

Draw the ATC and MC curves you just entered in Table 5. How do the old and new ATC curves compare?
The old and the new MC curves?

Table 6

Total Product (TP) Average variable cost (AVC) Average total
cost (ATC) Marginal cost (MC)

0 na na na

120 ___ ___ ___

360 —– ___ ___

540 ___ ___ ___

672 ___ ___ ___

756 ___ ___ ___

792 ___ ___ ___

Return to the old technology data. Suppose that the cost of
Al’s fixed inputs remains the same at $4000, but the cost of labor rises.
Specifically, suppose that a worker now receives $3000 per month.

Complete Table 7. For the two missing TP copy your answers
from Table 1

Table 7

Labor Total
Product (TP) Total variable cost
(TVC) Total cost (TC)

0 0 na
4000

1 100 3000 ___

2 300 —–
___

3 450 ___
___

4 ___ ___
16000

5 630 ___
___

6 ___ 18000
___

In Table 8 compare the cost before and after the increase

Table 8

Before
the increase
After the increase

TP ATC MC
ATC MC

0 ___ ___
___ ___

100
___ ___ ___ ___

300 ___ ___
___ ___

450 ___ ___
___ ___

630 ___ ___
___ ___

Last question: how did the rise in variable costs affect the
average total cost? The marginal cost?

Assignment Expectations

In the Module Case Assignment, you are expected to:

Describe the purpose of the paper and provide a conclusion.

Present information in a professional manner.

Answer the Case Assignment questions clearly and provide
necessary details.

Write clearly and correctly—that is, no poor sentence
structure, no spelling and grammar mistakes, and no run-on sentences.

Type and double-space the paper.

Whenever appropriate, please use Excel to show supporting
computations in an appendix, present economic information in tables, and use
the data to answer follow-up questions.

Module 2 – SLP

PRODUCTION AND COST ANALYSIS

Discuss the relationships between total cost, output, and
the price of labor and capital. Provide examples that illustrate how the prices
of inputs affect managerial decisions. Consider, in particular, the current
market for fuel and its implication for corporate profits.

SLP Assignment Expectations

In the Module 2 SLP Assignment, you are expected to:

Describe the purpose of the paper and provide a conclusion.

Present information in a professional manner.

Answer the SLP Assignment question clearly and provide
necessary details.

Write clearly and correctly—that is, no poor sentence
structure, no spelling and grammar mistakes, and no run-on sentences.

Type and double-space the paper.

Whenever appropriate, please use Excel to show supporting
computations in an appendix, present economic information in tables, and use
the data to answer follow-up questions.

Module 3 – Case

MARKET STRUCTURES

Case Assignment

Explain the Prisoner’s Dilemma game, the notion of dominant
strategy, and the concept of Nash equilibrium and cooperation. Using these
concepts, then, analyze the following duopoly game.

Philip Morris and R.J. Reynolds spend huge sums of money
each year to advertise their tobacco products in an attempt to steal customers
from each other. Suppose each year Philip Morris and R.J. Reynolds have to
decide whether or not they want to spend money on advertising. If neither firm
advertises, each will earn a profit of $2 million. If they both advertise, each
will earn a profit of $1.5 million. If one firm advertises and the other does
not, the firm that advertises will earn a profit of $2.8 million and the other
firm will earn $1 million.

If the two companies decide to collude to maximize profits,
what will each company do? What profit will each company earn?

What is the dominant strategy for each company, and what
profit will each company earn if they follow those strategies?

Is the solution you found in the first question a Nash
equilibrium?

Is the solution you found in the second question a Nash
equilibrium?

Assignment Expectations

In the Module 3 Case Assignment, you are expected to:

Describe the purpose of the paper and provide a conclusion.

Present information in a professional manner.

Answer the Case Assignment questions clearly and provide
necessary details.

Write clearly and correctly—that is, no poor sentence
structure, no spelling and grammar mistakes, and no run-on sentences.

Type and double-space the paper.

Whenever appropriate, please use Excel to show supporting
computations in an appendix, present economic information in tables, and use
the data to answer follow-up questions.

Module 3 – SLP

MARKET STRUCTURES

Describe the dominant characteristics of the industry in
which your company operates, addressing the following questions:

Who are your main competitors?

Are they significant barriers to entry?

What is your company’s market share?

What is the market share of your main competitors?

What is the four-firm concentration ratio in your industry?
Over time, has this ratio increased, decreased, or remained constant?

Is your company a military contractor? If so, how are prices
determined?

Based on your previous answer, is your industry moving more
in the direction of competition or is it moving more in the direction of market
power?

SLP Assignment Expectations

In the Module 3 SLP Assignment, you are expected to:

Describe the purpose of the paper and provide a conclusion.

Present information in a professional manner.

Answer the SLP Assignment question clearly and provide
necessary details.

Write clearly and correctly—that is, no poor sentence
structure, no spelling and grammar mistakes, and no run-on sentences.

Type and double-space the paper.

Whenever appropriate, please use Excel to show supporting
computations in an appendix, present economic information in tables, and use
the data to answer follow-up questions.

Module 4 – Case

ASYMMETRIC INFORMATION AND MARKET OUTCOMES

Case Assignment

Asymmetric information is a problem in many markets, such as
the used car market, the insurance markets, and the credit markets. Choose one
of these three markets, and using some of the concepts you learned from this
module, discuss the questions below:

What is the market response to asymmetric information?
(Hint: Does Coca-Cola have an asymmetric information problem?).

What is the market response to adverse selection? (Hint:
When you purchased life insurance, did you have to take a physical exam?).

What is the market response to moral hazard? (Hint: Remember last time you saw a doctor you had
to pay a $30 deductible?).

Do you think that education is a “market signal”
that can help companies make better economic decisions when asymmetric
information exists?

What would be the market response if there was perfect
information?

Assignment Expectations

In Module 4 Case Assignment, you are expected to:

Describe the purpose of the paper and provide a conclusion.

Present information in a professional manner.

Answer the Case Assignment question clearly and provide
necessary details.

Write clearly and correctly—that is, no poor sentence
structure, no spelling and grammar mistakes, and no run-on sentences.

Type and double-space the paper.

Whenever appropriate, please use Excel to show supporting
computations in an appendix, present economic information in tables, and use
the data to answer follow-up questions.

Module 4 – SLP

ASYMMETRIC INFORMATION AND MARKET OUTCOMES

Links to Estimation Techniques

Tim Shaughnessy, Chapter 7 — Demand Estimation and
Forecasting, available from https://www.youtube.com/watch?v=daiTjsnznjM

Matt Kermode, Explanation of Regression Results, Available
at https://www.youtube.com/watch?v=c5blVUkkjTM

Jason Delaney, Introduction to Multiple Regression,
Available at https://www.youtube.com/watch?v=eLpfEml4Vak

Session Long Project

PART 1

In 2006 the CEO of Bear Sterns, James Caynes, received a
compensation package of $34 million. The following year Bear Sterns cost $2.7
billion to the taxpayers. In 2006, the CEO of
Lehman Brothers received a compensation package of $27 million. On
September 15, 2008, Lehman Brothers filed for bankruptcy. The collapse of Lehman Brothers is seen by many as the key
event that sparked the Global Financial Crisis. In 2006, the CEO of Citigroup,
Charles Prince, received a compensation package of $25 million. Since then the
stock price has fallen from $50 a share to $3.5 a share. The CEO of Countrywide
Financial, Angelo Mozilo, did even better. His compensation package was $43
million. Angelo Mozilo and two other top executives were charged by the
Security and Exchange Commission (SEC) with fraud. According to the SEC, from 2005 through 2007, Countrywide Financial
engaged in an unprecedented expansion of its underwriting guidelines and was
writing riskier and riskier loans, which these senior executives were warned
might ultimately curtail the company’s ability to sell them. Countrywide
Financial was the third biggest originator of subprime mortgages and the
nation’s leader in subprime mortgage- backed securities. The tragedy is that
these individuals did not make decisions that were in their companies’ best
interest. Why? What went wrong? What caused the relation between the CEO and
the stockholders to go so badly awry? Discuss.

PART 2

An important component of this course is experience with
analyzing economic data at the managerial level. The computer is a perfect tool
for manipulating data and performing statistical analyses. While the focus of
BUS 530 is not on learning statistics, this course will utilize and improve
your computer skills with a computer assignment designed to illustrate the
interconnections between data, information and managerial decisions.

The primary software will be Microsoft Excel and the Excel
statistical add-in: Data Analysis. Microsoft Excel 2010 (and previous versions)
provides a set of data analysis tools called Analysis ToolPak which you can use
to save steps when you develop complex statistical analyses. You provide the
data and parameters for each analysis; the tool uses the appropriate
statistical macro functions and then displays the results in an output table.
The Analysis ToolPak is a Microsoft Office Excel add-in program that is
available when you install Microsoft Office or Excel. To use the Analysis
ToolPak in Excel, however, you need to load it first. Click the Microsoft
Office Button, and then click Excel Options. Click Add-Ins, and then in the
Manage box, select Excel Add-ins. Click Go. In the Add-Ins available box,
select the Analysis ToolPak check box, and then click OK. (If Analysis ToolPak
is not listed in the Add-Ins available box, click Browse to locate it.) If you
get prompted that the Analysis ToolPak is not currently installed on your
computer, click Yes to install it. After you load the Analysis ToolPak, the
Data Analysis command is available in the Analysis group on the Data tab.

In the Module 4 SLP assignment you are also asked to
estimate a market demand or a cost function (your choice) using the tools of
regression analysis and the regression software outlined above.

The estimation of demand follows two approaches:

the classical approach, whereby the quantity demanded of a
product is explained by its own price, the prices of related goods (complements
and substitutes), income, tastes and preferences, and the size of the
population, among others;

the hedonic approach, whereby the price of an asset (car,
house) is explained by the characteristics of the asset itself (i.e., the price
of housing depends on the number of bedrooms, the number of bathroom, the view
from the house (using a dummy variable: 1 = view, 0 = no view), the square
footage of the house, the square footage of the lot, etc).

PART 2: Assignment

You are given the data on housing. The data are collected
from the real estate pages of the Boston Globe during 1990. These are homes that sold in the Boston, MA
area. The source of the data is Wooldridge (2009) Introductory Econometrics: A
Modern Approach, 4th Edition, Cengage

VARIABLES

1. price price, in dollars

2. assess assessed value, in dollars

3. bdrms number of bedrooms

4. lotsize size of lot, square feet

5. sqrft size of house, square feet

Cut and paste in Excel the data set. Then, in Excel, obtain
the logarithmic transformation of the following variables using the Excel
function =LOG( . )

6. lprice log(price) : dependent
variable

7. lassess log(assess) : independent
variable

8. llotsize log(lotsize) : independent
variable

9. lsqrft log(sqrft) : independent
variable

DATASET 1

OBSERVATIONS

PRICE

SQRFT

ASSESS

BDRMS

LOTSIZE

300

2438

349.1

6126

370

2076

351.5

9903

191

1374

217.7

5200

195

1448

231.8

4600

373

2514

319.1

6095

466

2754

414.5

8566

332

2067

367.8

9000

315

1731

300.2

6210

206

1767

236.1

6000

240

1890

256.3

2892

285

2336

314

6000

300

2634

416.5

7047

405

3375

434

12237

212

1899

279.3

6460

265

2312

287.5

6519

227

1760

232.9

3597

240

2000

303.8

5922

285

1774

305.6

7123

268

1376

266.7

5642

310

1835

326

8602

266

2048

294.3

5494

270

2124

318.8

7800

225

1768

294.2

6003

150

1732

208

5218

247

1440

239.7

9425

275

1932

294.1

6114

230

1932

267.4

6710

343

2106

359.9

8577

477

3529

478.1

8400

350

2051

355.3

9773

230

1573

217.8

4806

335

2829

385

15086

251

1630

224.3

5763

235

1840

251.9

6383

361

2066

354.9

9000

190

1702

212.5

3500

360

2750

452.4

10892

575

3880

518.1

15634

209

1854

289.4

6400

225

1421

268.1

8880

246

1662

278.5

6314

713

3331

655.4

28231

248

1656

273.3

7050

230

1171

212.1

5305

375

2293

354

6637

265

1764

252.1

7834

313

2768

324

1000

417

3733

475.5

8112

253

1536

256.8

5850

315

1638

279.2

6660

264

1972

313.9

6637

255

1478

279.8

15267

210

1408

198.7

5146

180

1812

221.5

6017

250

1722

268.4

8410

250

1780

282.3

5625

209

1674

230.7

5600

258

1850

287

6525

289

1925

298.7

6060

316

2343

314.6

5539

225

1567

291

7566

266

1664

286.4

5484

310

1386

253.6

5348

471

2617

482

15834

335

2321

384.3

8022

495

2638

543.6

11966

279

1915

336.5

8460

380

2589

515.1

15105

325

2709

437

10859

220

1587

263.4

6300

215

1694

300.4

11554

240

1536

250.7

6000

725

3662

708.6

31000

230

1736

276.3

4054

306

2205

388.6

20700

425

1502

252.5

5525

318

1696

295.2

92681

330

2186

359.5

8178

246

1928

276.2

5944

225

1294

249.8

18838

111

1535

202.4

4315

268

1980

254

5167

244

2090

306.8

7893

295

1837

318.3

6056

236

1715

259.4

5828

202

1574

258.1

6341

219

1185

232

6362

242

1774

252

4950

Please keep in mind that when you interpret a regression
coefficient, you are assuming that all the other variables remain constant.

A Note on ANOVA

The ANOVA table is used to test the null hypothesis that all
regression coefficients (excluding the intercept term) are equal to zero
against the alternative hypothesis that at least one is different from
zero. This test is known as the F test
for regression. The F test is computed as follows, under the assumption that the
null hypothesis is true:

The F statistics has two sets of degrees of freedom:
numerator (attached to the Regression SS) and denominator degrees of freedom
(attached to Residual SS).

Excel computes the F statistic for you in the ANOVA table,
and computes in the last column the level of significance (p-value). If the
level of significance of the test is less than 5%, you will reject at the 5%
level the null hypothesis that all regression parameters are zero. On the other
hand, if the level of significance is greater than 5%, you will accept (i.e.,
fail to reject) the null hypothesis that all regression parameters are zero.

SLP Assignment Expectations

In the Module 4 SLP Assignment, you are expected to:

Describe the purpose of the paper and provide a conclusion.

Present information in a professional manner.

Answer the SLP Assignment question clearly and provide
necessary details.

Write clearly and correctly—that is, no poor sentence structure,
no spelling and grammar mistakes, and no run-on sentences.

Type and double-space the paper.

Whenever appropriate, please use Excel to show supporting
computations in an appendix, present economic information in tables, and use the
data to answer follow-up questions.

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