ACTIVITY 1 1. Suppose Lee Company is operating in a perfectly competitive market. They have been told that in the short run, advertising can help
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Activities in economics (Market structure and Profit)

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ACTIVITY 1 1. Suppose Lee Company is operating in a perfectly competitive market. They have been told that in the short run, advertising can help them increase their sales. Should Lee Company create an aggressive advertising campaign their product? 2. Even if my firms file for bankruptcy every year, they still continue operating. Why would they do this instead of completely shutting down? 3. Imagine that you are managing a small firm and thinking about entering the market of a monopolist. The monopolist is currently charging a high price, and you have calculated that you can make a nice profit charging 10% less than the monopolist. Before you go ahead and challenge the monopolist, what possibility should you consider for how the monopolist might react? 4. Why are generic pharmaceuticals significantly cheaper than name brand ones? 5. Firms in a perfectly competitive market are said to be "price takers"—that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent? 6. What is a "price taker" firm? 7. A single firm in a perfectly competitive market is relatively small compared to the rest of the market. What does this mean? How "small" is "small"?

ACTIVITY 2 Below is the Financial statement of Lee Company. Explain the reasons why the company is financially stable and analyze their strength in terms of financial factor and their weaknesses and how these weaknesses will turn into opportunity. Annual For the fiscal year ended : Dec 31, 2019 Currency(and units, if applicable) : PHP . Balance Sheet Item Current Year Previous Year Current Assets 7,883,732,608 7,116,343,887 Total Assets 14,093,685,359 11,370, 174,754 Current Liabilities 4,942,499,617 4,173,066,721 Total Liabilities 10,825,571,654 8,092,208,290 Retained Earnings/(Deficit) 1,621,371,760 1,625,483,991 Stockholders' Equity 3,268,113,705 3,277,966,464 Stockholders' Equity - Parent 3,240,914,837 3,292,677,829 Book Value Per Share 2.54 2.30 Income Statement Item Current Year Previous Year Gross Revenue 15,227,052,746 12,341,528,914 Gross Expense 13,936,325,902 10,973,880,237 Income/(Loss) Before Tax 835,842,577 1,816,697.246 Net Income/(Loss) After Tax 475,820,178 1,349,031,057 Net Income/(Loss) Attributable to Parent 494,574,503 1,359,766,592 Earnings/(Loss) Per Share (Basic) 0.35 0.95 Earnings/(Loss) Per Share Diluted) 0.35 0.68 Quarterly For the period ended : Sep 30, 2020 Currency(and units, if applicable) : PHP Balance Sheet Item Period Ended Fiscal Year Ended(Audited) Current Assets 8,889,914,239 7,883,732,608 Total Assets 15,119,225,417 14,093,685,359 Current Liabilities 5,765,250,197 4,942,499,617 Total Liabilities 12,067,009,706 10,825,571,654 Retained Earnings/(Deficit) 1,568,141,648 1,621,371,760 Stockholders' Equity 3,052,215,711 3,268, 113,705 Stockholders' Equity - Parent 3,030,283,358 3,240,914,837 Book Value Per Share 2.37 2.49 Income Statement Item Current Year (3 Months) Previous Year (3 Months) Current Year-To-Date Previous Year-To-Date Gross Revenue 3,987,971,925 3,761,029,270 9,631,161,294 11,485,305,115 Gross Expense 3,278,230,324 3,526,821,212 9,424,633,755 10,476, 195,984 Income/(Loss) Before Tax 610,366,268 446,799,455 54,604,468 720,894,647 Net Income/(Loss) After Tax 442,380,431 321,066,769 56,768,347 379,389,513 Net Income/(Loss) Attributable to Parent 448,502,955 325,961,463 -53,230,112 397,212,095 Earnings/(Loss) Per Share (Basic) 0.31 0.23 -0.04 0.28 Earnings/(Loss) Per Share (Diluted) 0.29 0.23 -0.04 0.28

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