Question: OIBDA is an abbreviation for "operating income

> Recognize each of the following statements as being true or false and explain why. a. A set of strategies constitutes a Nash equilibrium if no player can improve their position given the strategies chosen by other players. b. A secure strategy is very co

> During recent years, MicroChips Corp. has enjoyed substantial economic profits derived from patents covering a wide range of inventions and innovations for microprocessors used in high-performance desktop computers. A recent introduction, the Penultimate

> Portland Fluid Control, Inc., (PFC) is a major supplier of reverse osmosis and ultrafiltration equipment, which helps industrial and commercial customers achieve improved production processes and a cleaner work environment. The company has recently intro

> The Organization of the Petroleum Exporting Countries (OPEC) was formed on September 14, 1960 in Baghdad, Iraq. The current membership is comprised of five founding members plus six others: Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, S

> The Onondaga County Resource Recovery (OCRRA) system assumed responsibility for solid waste management on November 1, 1990, for thirty-three of the thirty-five municipalities in Onondaga County, New York. OCRRA is a non-profit public benefit corporation

> Calvin’s Barber Shops, Inc. has a monopoly on barbershop services provided on the south side of Chicago because of restrictive licensing requirements, and not because of superior operating efficiency. As a monopoly, Calvin’s provides all industry output.

> In a celebrated case tried during 1998, The Department of Justice charged Microsoft Corporation with a wide range of anti-competitive behavior. Among the charges leveled by the DOJ was the allegation that Microsoft illegally “bundled” the sale of its Mic

> An antitrust case launched more than a decade ago sent tremors throughout the academic community. Over the 1989 -91 period, the Department of Justice (DOJ) investigated a number of highly selective private colleges for price fixing. The investigation foc

> On May 12, 2000, the two daily newspapers in Denver, Colorado, filed an application with the U.S. Department of Justice for approval of a joint operating agreement. The application was filed by The E.W. Scripps Company, whose subsidiary, the Denver Publ

> The long-run supply curve for a given competitive firm can be written as QF= -250 + 8P or P = $31.25 + $0.125QF. Explain why the amount supplied by 50 such competitors is determined by multiplying the first expression by 50 rather than by multiplying the

> Courtney-Cox, Inc., is a Texas-based manufacturer and distributor of components and replacement parts for the auto, machinery, farm, and construction equipment industries. The company is presently funding a program of capital investment that is necessary

> Project Valuation. The Central Perk Coffee House, Inc., is engaged in an aggressive store refurbishing program and is contemplating expansion of its in-store baking facilities. This investment project is to be evaluated using the certainty equivalent adj

> Safecard Corporation offers a unique service. The company notifies credit card issuers after being informed that a subscriber's credit card has been lost or stolen. The Safecard service is sold to card issuers on an annual subscription basis. Relevant re

> Monopolistically Competitive Equilibrium. Soft Lens, Inc., has enjoyed rapid growth in sales and high operating profits on its innovative extended-wear soft contact lenses. However, the company faces potentially fierce competition from a host of new comp

> Optimal Input Usage. Medical Testing Labs, Inc., provides routine testing services for blood banks in the Los Angeles area. Tests are supervised by skilled technicians using equipment produced by two leading competitors in the medical equipment industry

> The benefit-cost approach first surfaced in France during 1844. In this century, benefit-cost analysis has been widely used in the evaluation of river and harbor projects since as early as 1902. In the United States, the 1936 Flood Control Act authorized

> Anthony Soprano is head of Satriale Pork Producers, Inc., a family-run pork producer with a hog-processing facility in Musconetcong, New Jersey. Each hog processed yields both pork and a render by-product in a fixed 1:1 ratio. Although the by-product is

> Production Function Estimation. Washington-Pacific, Inc., manufactures and sells lumber, plywood, veneer, particle board, medium-density fiberboard, and laminated beams. The company has estimated the following multiplicative production function for basic

> Bob Sponge has been retained to analyze two proposed capital investment projects, projects X and Y, by Square Pants, Inc., a local specialty retailer. Project X is a sophisticated working capital and inventory control system based upon a powerful persona

> Suppose that your college roommate has approached you with an opportunity to lend $25,000 to her fledgling home healthcare business. The business, called Home Health Care, Inc., plans to offer home infusion therapy and monitored in-the-home healthcare se

> George Constanza is a project coordinator at Kramer-Seinfeld & Associates, Ltd., a large Brooklyn-based painting contractor. Constanza has asked you to complete an analysis of profit margins earned on a number of recent projects. Unfortunately, your

> Assume that Hewlett-Packard (H-P) and Dell Computer have a large inventory of personal computers that they would like to sell before a new generation of faster, cheaper machines is introduced. Assume that the question facing each competitor is whether or

> Suppose two local suppliers are seeking to win the right to upgrade the communications capability of the internal “intranets” that link a number of customers with their suppliers. The system quality decision facing ea

> The local government in a West Coast college town is concerned about a recent explosion in apartment rental rates for students and other low-income renters. To combat the problem, a proposal has been made to institute rent control that would place a $900

> Indicate whether each of the following statements is true or false, and explain why. a. The Justice Department generally concerns itself with significant or flagrant offenses under the Sherman Act, as well as with mergers for monopoly covered by Section

> A number of domestic and foreign manufacturers produce replacement parts and components for personal computer systems. With exacting user specifications, products are standardized, and price competition is brutal. To illustrate the net amount of social w

> Idaho Natural Resources (INR) has two mines with different production capabilities for producing the same type of ore. After mining and crushing, the ore is graded into three classes: high, medium, and low. The company has contracted to provide local sme

> Suppose Modern Merchandise, Inc., makes and markets do-it- yourself hardware, housewares, and industrial products. The company's new Aperture Miniblind is winning customers by virtue of its high quality and quick order turnaround time. The product also b

> Both General Electric and Microsoft Corp. feature charismatic and highly effective chief executive officers, display enviable records of serving growing markets with remarkable efficiency, and enjoy sterling accounting returns and stock- market valuation

> In the 1930s, economists Adolf A. Berle and Gardiner C. Means expressed concern that managers with relatively little ownership interest might demonstrate a suboptimal focus on transitory short-term profits rather than durable long-run value. Berle and Me

> Gross Domestic Product (GDP) is a measure of overall activity in the economy. It is defined as the value at the final point of sale of all goods and services produced during a given period by both domestic and foreign-owned enterprises. GDP data for the

> Branded Products, Inc., based in Oakland, California, is a leading producer and marketer of household laundry detergent and bleach products. About a year ago, Branded Products rolled out its new Super Detergent in 30 regional markets following its succes

> It remains a widely held belief that regulation is in the public interest and influences firm behavior toward socially desirable ends. However, in the early 1970s, Nobel laureate George Stigler and his colleague Sam Peltzman at the University of Chicago

> The Las Vegas Valley Water District (LVVWD) is a not-for-profit agency that began providing water to the Las Vegas Valley in 1954. The District helped build the city's water delivery system and now provides water to more than one million people in Southe

> In linear programming, why is it so critical that the number of nonzero-valued variables exactly equal the number of constraints at corners of the feasible space?

> In the United States, steel production has remained constant since the 1970s at about 100 million tons per year. Large integrated companies, like U.S. Steel remain important in the industry, but roughly 50% of domestic production is now produced by newer

> Is the number of isocost, isorevenue, or isoprofit lines in a typical two-input bounded feasible space limited?

> Describe the relative distance method used in graphic linear programming analysis.

> Assume that output can be produced only using processes A and B. Process A requires inputs L and K to be combined in the fixed ratio 2L:4K, and process B requires 4L:2K. Is it possible to produce output efficiently using 3L and 3K? Why or why no

> Do equal distances along a given production process ray in a linear programming problem always represent an identical level of output?

> Why can’t linear programming be used in each of the following circumstances a. Strong economies of scale exist. b. As the firm expands output, the prices of variable factors of production increase. c. As output increases, product prices decline.

> Give some illustrations of managerial decision situations in which you think the linear programming technique would be useful.

> Research in financial economics concludes that stockholders of target firms in takeover battles “win” (earn abnormal returns) and that stockholders of successful bidders do not lose subsequent to takeovers, even though takeovers usually occur at substant

> Suppose that Black & Decker’s interest rate on newly-issued debt is 7.5% and the firm’s marginal federal-plus-state income tax rate is 40%. This implies a 4.5% after-tax component cost of debt. Also assume that the firm has decided to finance next year’s

> An efficient firm employs inputs in such proportions that the marginal product/price ratios for all inputs are equal. In terms of capital budgeting, this implies that the marginal cost of debt should equal the marginal cost of equity in the optimal capit

> How is a crossover discount rate calculated, and how does it affect capital budgeting decisions?

> Critics argue that if Congress wants to make the tax code more equitable, a good place to start would be removing unfair tariffs and quotas. Today, there are more than eight thousand import tariffs, quotas, so-called voluntary import restraints, and othe

> Level 3 Communications, Inc., like many emerging telecom carriers, has only limited and infrequent access to domestic debt and equity markets. Explain the attractiveness of a “benefit-cost ratio” approach in capital budgeting for Level 3, and illustrate

> Toyota Motor Corp., like most major multinational corporations, enjoys easy access to world financial markets. Explain why the NPV approach is the most appropriate tool for Toyota’s investment project selection process.

> What major steps are involved in the capital budgeting process?

> “Risky projects are accepted for investment on the basis of favorable expectations concerning profitability. In the post-audit process, they must not be unfairly criticized for failing to meet those expectations.” Discuss this statement.

> “The decision to start your own firm and go into business can be thought of as a capital budgeting decision. You only go ahead if projected returns look attractive on a personal and financial basis.” Discuss this statement.

> Discuss the role of common costs in pricing practice.

> What conditions are necessary before price discrimination is both possible and profitable? Why does price discrimination result in higher profits?

> What is price discrimination?

> “Marginal cost pricing, as well as the use of incremental analysis, is looked upon with favor by economists, especially those on the staffs of regulatory agencies. With this encouragement, regulated industries do indeed employ these rational techniques q

> Each year, about 9 billion bushels of corn are harvested in the United States. The average market price of corn is a little over $2 per bushel, but costs farmers about $3 per bushel. Tax payers make up the difference. Under the 2002 $190 billion, 10-year

> “One of the least practical suggestions that economists have offered to managers is that they set marginal revenues equal to marginal costs.” Discuss this statement.

> Why does The Wall Street Journal offer bargain rates to students but not to business executives?

> Discuss how seasonal factors influence supply and demand, and why markups on fresh fruits and vegetable are at their highest during the peak of season.

> Explain why successful firms that employ markup pricing use fully allocated costs under normal conditions, but typically offer price discounts or accept lower margins during off-peak periods when excess capacity is available.

> Why is it possible to determine the marginal costs of joint products produced in variable proportions but not those of joint products produced in fixed proportions?

> Express the markup on cost formula in terms of the markup on price, and use this relation to explain why a 100% markup implies a 50% markup on price.

> How are the solution values for primal and dual linear programming problems actually employed in practice?

> The primal problem calls for determining the set of outputs that will maximize profit, subject to input constraints. a. What is the dual objective function? b. What interpretation can be given to the dual variables called the shadow prices or implicit va

> Will maximizing a profit contribution objective function always result in also maximizing total net profits?

> When the basic valuation model is adjusted using the risk-free rate, i, what economic factor is being explicitly accounted for?

> In Africa, the continent where the polio epidemic has been most difficult to control, international relief efforts aimed at disease eradication often work against a backdrop of civil unrest and war. In some countries, temporary cease-fire agreements must

> What is the value of decision trees in managerial decision making?

> “One might expect firms in a monopolistically competitive market to experience greater swings in the price of their products over the business cycle than those in an oligopoly market. However, fluctuations in profits do not necessarily follow the same pa

> Would you expect the demand curve for a firm in a monopolistically competitive industry to be more or less elastic in the long run after competitor entry has eliminated economic profits?

> Explain the process by which economic profits are eliminated in a monopolistically competitive market as compared to a perfectly competitive market.

> Describe the oligopoly market structure and give some examples.

> Describe the monopolistically competitive market structure and give some examples.

> “Economic profits result whenever only a few large competitors are active in a given market.” Discuss this statement

> Suppose that a competitive firm long-run supply curve is given by the expression QF = - 500 + 10P. Does this mean that the firm will supply -500 units of output at a zero price? If so, what does output of -500 units mean?

> “Airline passenger service is a terrible high-fixed cost business featuring fierce price competition. With uniform safety, customers pick the lowest airfare with the most convenient departures. Except for pilots, nobody in the airline business makes any

> “If excess profits are rampant in the oil business, why aren’t the stockholders of industry giants like Exxon Mobil, Chevron Texaco, and Royal Dutch Petroleum making huge stock-market profits?” Discuss this statement.

> In 1998, California’s newly deregulated power market began operation. The large power utilities in the state turned over control of their electric transmission facilities to the new Independent System Operator (ISO) to assure fair access to transmission

> “For smaller firms managed by their owners in competitive markets, profit considerations are apt to dominate almost all decisions. However, managers of giant corporations have little contact with stockholders, and often deviate from profit- maximizing

> “A higher minimum wage means some low wage workers will get fired because there will be less money available for labor costs. An international minimum wage, scaled according to the working conditions and cost of living in a particular country, would all

> The Worker Adjustment and Retraining Notification Act (WARN) requires employers with 100 or more employees to provide notification 60 calendar days in advance of plant closings and mass layoffs. Advance notice gives workers and their families transition

> Competitive firms are sometimes criticized for costly but superfluous product differentiation. Is there an easy means for determining if such efforts are in fact wasteful?

> One way of inferring competitive conditions in a market is to consider the lifestyle enjoyed by employees and owners. In vigorously competitive markets, employee compensation tends to be meager and profits are apt to be slim. Describe the perfectly com

> Historically, the Regional Bell Operating Companies (RBOCs) had a monopoly on the provision of local voice phone service. Regulation has now been eased to permit competition from Competitive Local Exchange Carriers (CLECs), cable companies, satellite o

> “Market estimates of investors’ reactions to risk cannot be measured precisely, so it is impossible to set risk-adjusted discount rates for various classes of investment with a high degree of precision.” Discuss this statement.

> If the expected net present value of returns from an investment project is $50,000, what is the maximum price that a risk-neutral investor would pay for it? Explain.

> Graph the relation between money and its utility for an individual who buys both household fire insurance and state lottery tickets.

> State-run lotteries commonly pay out 50 percent of total lottery ticket sales in the form of jackpots and prizes. Use the certainty equivalent concept to quantify the minimum value placed on each risky dollar of expected return by lottery ticket buyers.

> To many upscale homeowners, no other flooring offers the warmth, beauty, and value of wood. New technology in stains and finishes call for regular cleaning that takes little more than sweeping and/or vacuuming, with occasional use of a professional wood

> Confronted with a choice between $50 today or $100 one year from now, economic experiments suggest that the vast majority of people will take will take the $50 today. At the same time, economic experiments show that most people will opt to take $100 in t

> The standard deviation measure of risk implicitly gives equal weight to variations on both sides of the expected value. Can you see any potential limitations of this treatment?

> Domestic investors sometimes miss out on better investment opportunities available to global investors. At the same time, global investors face special risks. Discuss some of the special risks faced by global investors.

> In economic terms, what is the difference between risk and uncertainty?

> The statement “You get what you pay for” reflects the common perception that high prices indicate high product quality and low prices indicate low quality. Irrespective of market structure considerations, is this statement always correct?

> Why is the four-firm concentration ratio only an imperfect measure of market power?

> Which oligopoly model(s) result in long-run oligopoly market equilibrium that is identical to a competitive market price/output solution?

> What is the essential difference between the Cournot and Stackelberg models?

> What are agency costs? Describe some agency costs common among U. S. corporations.

> Characterize the essential difference between a sequential game and a simultaneous- move game.