UGBA Paper 2 - Chang, Michael 19379082/Section 101 One...

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Chang, Michael 19379082/Section 101 One concept underlies all Production decisions: Should the firm make a component or just buy it in pre-made from a supplier? Interestingly, this also applies in our own lives: We wash and iron our blouses and shirts—or we send them out to the cleaners. In this paper, you will identify one activity that you usually do for yourself, calculate the full cost and compare that with “buying it in.” For example, on Saturday mornings, I’m likely to make pancakes for my family for breakfast. If I’m lazy (or busy writing a ugba-10 exam) I can just take everyone out to Bette’s Oceanview Diner 1 and purchase pancakes at $5.50 per person. Your GSIs will help you understand the concept of “full cost”. You should have an appendix to your paper (beyond the usual two-page limit) showing how you calculate cost of doing something yourself. In the grading, you’ll be given credit for showing some reasonable creativity in choosing a challenging activity. For example, “washing my car myself versus taking it to the car wash” is responsive to the prompt, but isn’t as complex as some other activities. In your conclusion, discuss whether this exercise was worthwhile in your opinion, and whether, as a result, there are any activities that you are going to pay to have done. FORMAT CHECK I. Intro II. Introduction of activity III. Doing it myself a. Assumptions b. Full Cost: time, physical inputs, existing inputs IV. Buying it premade from a supplier a. Assumptions b. Full cost: time, physical inputs, existing inputs V. Conclusion a. Was this exercise worthwhile i. Accuracy, enlightenment, joy, etc b. Are there any activities I have to pay to have done VI. Appendix of calculations
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Chang, Michael 19379082/Section 101 It is always difficult to balance thriftiness and convenience and in our daily lives because people are usually willing to spend extra money for speed, efficiency, and other factors such as reliability. While it is impossible to take into account every single factor when trying to value
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This note was uploaded on 03/22/2009 for the course UGBA 08403 taught by Professor Robinson during the Spring '09 term at University of California, Berkeley.

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UGBA Paper 2 - Chang, Michael 19379082/Section 101 One...

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