Managerial Decisions for Firms with Market Power
Ability of a firm to raise price without losing
all its sales
Any firm that faces downward sloping demand
has market power
Gives firm ability to raise price above
The Fine Wine Rack Company
Welcome to the wine cellar business. As Production Manager of the Fine Wine Rack Co., you
supervise a small factory which builds custom bottle storage systems. These storage systems, or
"wine racks", have been insta
Optimally Allocating Advertising Expenditures
The advertising decision is not as straightforward as it was not too long ago. As Joel
Weiner, the executive vice president of marketing for Kraft, remembered, In the olden
daysyou ran your co
Optimal Product Quality
An important managerial decision is how much should be spent on improvements in
product quality. Certainly the firms customers value quality, so quality improvements
would probably increase sales and revenue. But q
Manager, Profits and markets
Market Structure & Decision Making
Ownership of the residual
Scarcity and choice
What is economics?
Human beings, those creatures are plagued w
Scheduling ahead from some point in time.
Used when the question is:
How long will it take to complete this job?
Scheduling backwards from some due date
Used when the question is:
GETTING STARTED WITH FINE WINE RACK
Overview. Fine Wine Rack is a job shop scheduling problem with necessary predecessor relationships
reminiscent of MRP. However, the MRP algorithm is not the key to completing Fine Wine Rack because
Fine Wine Rack is a f
Class exercise 1: Activity A has the following marginal (MB) and marginal cost (MC) functions:
MB = 2,500 20A
MC = 500 + 30A
where MB and MC are measured in dollars.
The 10th unit of the activity increases total benefit by $_ and increases total cost
Chapter 11:Managerial Decisions in Competitive
The characteristics of a market that influence how
trading takes place
How many buyers and sellers?
Products: standardized or significantly different?
Barriers to entry/exit ?
Effects of Changes in Determinants of Demand on Price and Sales
Much of the discussion of demand in this chapter concerns the effects of
changes in the determinants of demand, or demand-shifting variables, on
demand functions, and the con
Chapter 3 and 4: Demand, Supply and Market Equilibrium
In this chapter you will learn:
1. What demand is and what affects it.
2. What supply is and what affects it
3. How supply and demand together determine market equilibrium.
4. How changes in supply an
In Class Exercises
1. A sunk cost is one that
a. changes as the level of output changes in the short run
b was paid in the past and will not change regardless of
. later decisions
c. should determine the rational course of action in the
d has the m
Chapter 3: Marginal Analysis for Optimal Decision Making
Optimization is a process that finds a best, or optimal, solution for your model. In other words given
your constraints optimization finds the best possible solution to the problem at hand