Virtually every good is scarce in the sense we have defined it, but are water and air exceptions? If they are not scarce, explain whether it would be possible to charge for them. Does the way in which you define water and air determine whether they are scarce or abundant?
> The following unadjusted trial balance contains the accounts and balances of Dylan Delivery Company as of December 31, 2015. 1. Use the following information about the company’s adjustments to complete a 10-column work sheet. a. Unrecor
> These partially completed Income Statement columns from a 10-column work sheet are for Brown’s Bike Rental Company. (1) Use the information to determine the amount that should be entered on the net income line of the work sheet. (2) P
> Capri Company began the current period with a $20,000 credit balance in the K. Capri, Capital account. At the end of the period, the company’s adjusted account balances include the following temporary accounts with normal balances. Af
> The following data are taken from the unadjusted trial balance of the Westcott Company at December 31, 2015. Each account carries a normal balance and the accounts are shown here in alphabetical order. 1. Use the data above to prepare a work sheet. Ent
> Samsung (www.Samsung.com) is a market leader in high-tech electronics manufacturing and digital media, and it competes to some extent with both Apple and Google. Key financial ratios for the current fiscal year follow. Required 1. Which company is most
> Key financial figures for Apple’s fiscal year ended September 28, 2013, follow. Required 1. What is the total amount of assets invested in Apple? 2. What is Apple’s return on assets for fiscal year 2013? Its assets a
> What economic costs and benefits might a business experience if it decided to adopt a more socially responsible position? How might such costs and benefits change over the longer term?
> In what ways might business be socially responsible?
> How suitable are legal restrictions in the following cases? (a) Ensuring adequate vehicle safety (e.g. tyres with sufficient tread or roadworthy vehicles). (b) Reducing traffic congestion. (c) Preventing the use of monopoly power. (d) Ensuring that merge
> Why might it be better to ban certain activities that cause environmental damage rather than to tax them?
> Make a list of pieces of information a firm might want to know and consider whether it could buy the information and how reliable that information might be.
> Some roads could be regarded as a public good, but some could be provided by the market. Which types of road could be provided by the market? Why? Would it be a good idea?
> Distinguish between publicly provided goods, public goods and merit goods.
> Should regulators of utilities that have been privatised into several separate company’s permit (a) horizontal mergers (within the industry); (b) vertical mergers; (c) mergers with firms in other related industries (e.g. gas and electricity suppliers)?
> Should governments or regulators always attempt to eliminate the supernormal profits of monopolists/oligopolists?
> If two or more firms were charging similar prices, what types of evidence would you look for to prove that this was collusion rather than mere coincidence?
> How would you use the principle of weighing up marginal costs and marginal benefits when deciding whether to (a) buy a new car; (b) study for an extra hour? How would a firm use the same principle when deciding whether to (c) purchase a new machine; (
> If anti-monopoly legislation is effective enough, is there ever any need to prevent mergers from going ahead?
> What problems are likely to arise in identifying which firms’ practices are anti-competitive? Should the CMA take firms’ assurances into account when deciding whether to grant an exemption?
> Assume that a firm discharges waste into a river. As a result, the marginal social costs (MSC) are greater than the firm’s marginal (private) costs (MC). The following table shows how MC, MSC, AR and MR vary with output. (a) How much
> What is the efficiency wage hypothesis? Explain what employers might gain from paying wages above the market-clearing level.
> Do any of the following contradict the theory that the demand for labour equals the marginal revenue product: wage scales related to length of service (incremental scales), nationally negotiated wage rates, discrimination, firms taking the lead from othe
> Drawing on recent examples, consider the extent to which strike action is likely to help trade union members achieve their various aims.
> To what extent could a trade union succeed in gaining a pay increase from an employer with no loss in employment?
> The following are figures for a monopsonist employer: Fill in the missing figures for columns (3) and (4). How many workers should the firm employ if it wishes to maximise profits? Marginal cost of labour (£) Number of Wage rate (£) (2) 100 Total cos
> If, unlike a perfectly competitive employer, a monopsonist has to pay a higher wage to attract more workers, why, other things being equal, will a monopsonist pay a lower wage than a perfectly competitive employer?
> For what types of reason does the marginal revenue product differ between workers in different jobs?
> Make a list of three things you did yesterday. What was the opportunity cost of each?
> The wage rate a firm has to pay and the output it can produce varies with the number of workers as follows (all figures are hourly): Assume that output sells at £2 per unit. (a) Copy the table and add additional rows for TCL, MCL, TRPL and
> Provide a case for and against high bonuses.
> How have changes in society, laws and technology affected the UK labour market?
> Identify the potential costs and benefits of the flexible firm to (a) employers and (b) employees.
> ‘Statutory minimum wages will cause unemployment.’ Is this so?
> If a firm faces a shortage of workers with very specific skills, it may decide to undertake the necessary training itself. If on the other hand it faces a shortage of unskilled workers it may well offer a small wage increase in order to obtain the extra
> Assess the advantages and disadvantages facing a host state when receiving MNC investment
> Explain the link between the life cycle of a product and multinational business.
> ‘Going global, thinking local’. Explain this phrase, and identify the potential conflicts for a business in behaving in this way.
> If reducing costs is so important for many multinationals, why is it that they tend to locate production not in low-cost developing economies, but in economies within the developed world?
> Which of the following are macroeconomic issues, which are microeconomic ones and which could be either depending on the context? (a) Inflation. (b) Low wages in certain service industries. (c) The rate of exchange between the pound and the euro. (d) Why
> How might a business’s strategy in the domestic and global economy be affected by the onset of recession?
> What are the advantages and disadvantages to an economy, such as the UK, of having a large multinational sector?
> Using the FDI database in the statistics section of the UNCTAD website (UNCTADstat) at (http://unctadstat.unctad.org/EN/), find out what has happened to FDI flows over the past five years (a) worldwide; (b) to and from developed countries; (c) to and f
> A firm can grow by merging with or taking over another firm. Such mergers or takeovers can be of three types: horizontal, vertical or conglomerate. Which of the following is an example of which type of merger (takeover)? a) A soft drinks manufacturer mer
> What is meant by the term ‘vertical integration’? Why might a business wish to pursue such a growth strategy?
> Distinguish between internal and external growth strategy. Identify a range of factors which might determine whether an internal or external strategy is pursued.
> Explain the two-way relationship between a business’s rate of growth and its profitability
> What do you understand by the term ‘core competence’ when applied to a business? What are the arguments for and against a firm narrowly focusing on its core competencies?
> Distinguish between a business’s primary and support activities in its value chain. Why might a business be inclined to outsource its support activities? Can you see any weaknesses in doing this?
> Outline the Five Forces Model of competition. Identify both the strengths and weaknesses of analysing industry in this manner.
> How has the weak economic climate since 2008 affected small businesses? Do you think it is easier or more difficult to set up a business during a recession? Explain your answer.
> Compare and contrast the competitive advantages held by both small and big business.
> In what sense can the stock market be said to be efficient? Why is it unlikely to be perfectly efficient?
> What are the advantages and disadvantages for a company in using the stock market to raise finance for expansion?
> Assume that an independent film company, which has up to now specialised in producing documentaries for a particular television broadcasting company, wishes to expand. Identify some possible horizontal, vertical and other closely related fields into whic
> What do you understand by the term ‘business strategy’? Explain why different types of business will see strategic management in different ways? Give examples.
> When are increased profits in a manager’s personal interest?
> Make a list of six aims that a manager of a high street department store might have. Identify some conflicts that might arise between these aims.
> What are the limitations of game theory in predicting oligopoly behaviour?
> Devise a box diagram like that in Figure 5.5, only this time assume that there are three firms, each considering the two strategies of keeping price the same or reducing it by a set amount. Identify the best response for each firm. Is the game still a ‘d
> Outline the main determinants of business performance. In each case, explain whether it is a micro- or macroeconomic issue.
> In which of the following industries is collusion likely to occur: bricks, beer, margarine, cement, crisps, washing powder, blank DVDs or BluRay, carpets? Explain why.
> Will competition between oligopolists always reduce total industry profits?
> For what reasons would you expect a monopoly to charge (a) a higher price, and (b) a lower price than if the industry were operating under perfect competition?
> As an illustration of the difficulty in identifying monopolies, try to decide which of the following are monopolies: a train operating company; your local evening newspaper; the village hairdresser; the Royal Mail; Microsoft Office suite of programs; Int
> How will a business’s pricing strategy differ at each stage of its product’s life cycle? First assume that the business has a monopoly position at the launch stage; then assume that it faces a high degree of competition right from the outset.
> A frequent complaint of junior and some senior managers is that they are frequently faced with new targets from above, and that this makes their life difficult. If their complaint is true, does this conflict with the hypothesis that managers will try to
> Think of four different products or services and estimate roughly how many firms there are in the market. You will need to decide whether ‘the market’ is a local one, a national one or an international one. In what ways do the firms compete in each of th
> What determines the size of normal profit? Will it vary with the general state of the economy?
> Normal profits are regarded as a cost (and are included in the cost curves). Explain why.
> Why are many firms likely to experience economies of scale up to a certain size and then diseconomies of scale after some point beyond that?
> What is the Standard Industrial Classification (SIC)? In what ways might such a classification system be useful? Can you think of any limitations or problems such a system might have over time?
> What economies of scale is a large department store likely to experience?
> Does the marginal value of a variable (such as cost, revenue or profit) determine the average value of the variable, or does the average value of the variable determine the marginal value? Explain your answer.
> Why does the marginal cost curve pass through the bottom of the average cost curve and the average variable cost curve?
> The following are some costs incurred by a shoe manufacturer. Decide whether each one is a fixed cost or a variable cost or has some element of both. (a) The cost of leather; (b) The fee paid to an advertising agency; (c) Wear and tear on machinery; (d)
> Up to roughly how long is the short run in the following cases? (a) A karaoke firm; (b) Electricity power generation; (c) A small grocery retailing business; (d) ‘Superstore Hypermarkets plc’. In each case, specify your assumptions.
> Illustrate on a diagram similar to Figure 4.6 what would happen in the long-run if price were initially below PL.
> Would it ever be worthwhile for a firm to try to continue in production if it could not cover its long-run average (total) costs?
> A firm will continue producing in the short run even if it is making a loss, providing it can cover its variable costs. Explain why. Just how long will it be willing to continue making such a loss?
> Are all explicit costs variable costs? Are all variable costs explicit costs?
> How might we account for the growth in non-price competition within the modern developed economy?
> Assume you are a UK car manufacturer and are seeking to devise a business strategy for the twenty-first century. Conduct a STEEPLE analysis of the UK car industry and evaluate the various strategies that the business might pursue.
> You are about to launch a new range of cosmetics, but you are still to decide upon the content and structure of your advertising campaign. Consider how market surveys and market experiments might be used to help you assess consumer perceptions of the pro
> You are working for a recording company which is thinking of signing up some new bands. What market observations, market surveys and market experiments could you conduct to help you decide which bands to sign?
> What are the relative strengths and weaknesses of using (a) market observations, (b) market surveys and (c) market experiments as a means of gathering evidence on consumer demand?
> What has happened to premiums for home insurance for those houses in areas that are at risk of flooding? Which factors have caused this change? Is there a role for the government to intervene in this market?
> How can marginal utility be used to explain the price elasticity of demand for a particular brand of a product?
> How can advertising help a nation recover from an economic downturn?
> There are many methods of advertising, from newspapers to television to the Internet. What trends can you identify for the amount of spending on the various methods of advertising as a percentage of total advertising expenditure?
> Imagine that ‘Sunshine’ sunflower margarine, a well-known brand, is advertised with the slogan, ‘It helps you live longer’ (the implication being that butter and margarines high in saturates shorten your life). What do you think would happen to the deman
> Think of some advertisements that deliberately seek to make demand less price elastic. How do they do this?
> Consider how the selection of the product/market strategy (market penetration, market development, product development and diversification) will influence the business’s marketing mix. Choose a particular product and identify which elements in the market
> Explain why the business objectives of owners and managers are likely to diverge. How might owners attempt to ensure that managers act in their interests and not in the managers’ own interests?
> How would marginal utility and market demand be affected by a rise in the price of (a) a substitute good (b) a complementary good?
> Rank the following in ascending order of elasticity: jeans, black Levi jeans, black jeans, black Levi 501 jeans, trousers, outer garments, clothes.
> Why does price elasticity of demand have a negative value, whereas price elasticity of supply has a positive value?
> Outline the main factors that might influence the size of the profit mark-up set by a business
> If a cinema could sell all its seats to adults in the evenings at the end of the week, but only a few on Mondays and Tuesdays, what price discrimination policy would you recommend to the cinema in order for it to maximise its weekly revenue?
> The price of tablet computers and digital cameras fell significantly in the years after they were first introduced and at the same time demand for them increased substantially. Use cost and revenue diagrams to illustrate these events. Explain the reasoni
> What will happen to the equilibrium price and quantity of butter in each of the following cases? You should state whether demand or supply or both have shifted and in which direction: (a) a rise in the price of margarine; (b) a rise in the demand for y
