ECO550 - Assignment #2
ECO550 - Assignment #2
Popular in Course
verified elite notetaker
Popular in Department
This 0 page Study Guide was uploaded by tophomework Notetaker on Sunday November 15, 2015. The Study Guide belongs to a course at a university taught by a professor in Fall. Since its upload, it has received 21 views.
Reviews for ECO550 - Assignment #2
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 11/15/15
1 Brie y describe the details of the fictitious business that you created for this assignment Betsy s Baubles is a headband manufacturing firm located in Dover Delaware The currently employees 100 workers and it produces 6000 units of output per month It staffs operations with 20 working days per month Its employees earn a daily wage of 70 and the cost of its daily output is 32 The aggregate cost of other variable inputs is 2000 per day The marginal cost of the last unit is 30 2 Assess the current environmental scan factors that are relevant to the decision making process Determine the factors that will have the greatest impact on plant operations and management s decision to continue or discontinue operations Provide a rationale for your determination Betsy s Baubles operates in what can be most closely described as pure competition market structure characterized by a large number of buyers and sellers of a homogeneous nondifferentiated product Entry and exit from the industry is costless or nearly so Information is freely available to all market participants and there is no collusion among firms in the industry homogeneous nondifferentiated product Entry and exit from the industry is costless or nearly so Information is freely available to all market participants and there is no collusion among firms in the industry McGuigan 2012 p 352 Because the conditions for perfect competition are strict there are few if any perfectly competitive markets Given this market structure Betsy s Baubles is a price taker because of sheer magnitude of hair accessory manufacturers The amount of perfect substitutes for the product forces the firm to sell its output at the going market rate In a perfectly competitive market a firm39s demand curve is perfectly elastic Due to such high price elasticity any shift in price will cause buyers to choose other manufactures products Optimum consulting has been called in to assist the firm in making recommendations to turn around current financial position Where total costs exceed total revenue 3 Evaluate the nancial performance of the company using the information provided in the scenario Consider all the key drivers of performance such as company profit or loss for both the short term and long term and how each factor in uences managerial decisions Be sure to show the calculations that helped you reach your conclusions 4 Recommend how the company can improve its profitability to deliver more value to its stakeholders Then develop a brief plan to implement the recommendations 5 Assess the circumstances in which the company should discontinue operations and how management should react when confronted with these circumstances Provide a rationale with your response References McGuigan J R Moyer R Camp Harris F H D 2008 Managerial economics Applications strategy and tactics 12th ed Mason OH South Western Cengage Learning
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'