BUSI 620 Week 6 Questions for Critical Thinking 6
Critical Thinking Six
Salvatore’s Chapter 12:
a) Discussion Questions: 7, 11, and 13.
b) Problems: 12 and spreadsheet problem 1 (p. 523).
Discussion Question 7: Quantity discounts are not a form of price discrimination because the firm saves on handling large orders? True or false? Explain
Discussion Question 11: How is the transfer price of an intermediate product determined when:
a) There is no external market for the intermediate product
b) A perfectly competitive external market for the intermediate product exists
c) An imperfectly competitive external market for the intermediate product exists?
Discussion Question 13: What are:
a) The advantages of cost-plus pricing?
b) The disadvantages of cost-plus pricing?
c) Why is incremental cost pricing the correct pricing method? Why is full-cost pricing equal to it?
a) Will a monopolist’s total revenue be larger with second-degree price discrimination when the batches on which it charges a uniform price are larger or smaller? Why?
b) How does a two-part tariff differ from bundling?
Spreadsheet Problem 1: Using a spreadsheet like the following, entering formulas for the total revenue and consumers surplus, and given the following demand curve of a consumer for a monopolist product Q=14-2p
a) Find the total revenue of the monopolist when it sells 6 units of the commodity without practicing any form of discrimination. What is the value of the consumer’s surplus?
b) What would be the total revenue of the monopolist if it practiced first-degree price discrimination? How much would the consumers’ surplus be in this case?
c) What if the monopolist charged P=5.50 for the first 3 units of the commodity and P=4 for the next 3 units – what type of price discrimination is this?
Froeb et al.’s Chapter 14:
a) Individual problems: 14–1 and 14–4.
Individual Problem 14-1: Why might Mattel set a much lower contribution margin on its Barbie dolls than on the accessories for the dolls?
Individual Problem 14-4: A manufacturer of microwaves has discovered that male shoppers have little value for microwaves and attribute almost no extra value to an auto-defrost feature. Female shoppers generally value microwaves more than men and attribute value to the auto-defroster feature. There is little additional cost to incorporating auto defrost feature. Since men and women cannot be charged different prices for the same product the manufacturer is considering introducing two different models. The manufacturer has determined that men value a simple microwave at 70 and one with auto defrost at 80 while women value a simple microwave at 80 and one with auto defrost at 150. If there is an equal number of men and women, what pricing strategy will yield the greatest revenue? What if women compromise the bulk of microwave shoppers?
Salvatore’s Chapter 13:
a) Discussion Questions: 8 and 10.
b) Problems: 12, 13, and 15.
Discussion 8: What is the basic difference between using a subsidy to induce producers to install antipollution equipment and a tax on producers who pollute?
Discussion 10: Given the difficulties that the regulation of public utilities faces, would it not be better to nationalize public utilities, as some European countries have done? Explain your answer
Problem 12: Determine whether the Justice Department would challenge a merger between two firms in an industry with 10 equal sized firms, based on its 1984 Herfindahl-index guidelines only
Problem 13: Explain:
a) In what way the U.S. trucking industry exemplified the capture theory hypothesis of government regulation prior to the passage of the Motor Carrier Act of 1980 and
b) The result of the passage of the Motor Carrier Act in 1980.
Problem 15: From the following figure referring to natural monopolist, indicate
a) The best level of output, price, and profit per unit and in total for the monopolist
b) The best level of output and price with a lump sub tax that would eliminate all monopolists profits
c) The best level of output, price and profits per unit and in total with a 3 per unit tax collected from the monopolist, and
d) The best level of output and profit per unit and in total if the government sets the price of the product or service at 10.
e) Which is the best method of controlling monopoly power? Why?
Important information for writing discussion questions and participation
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Plagiarism is highly prohibited. Please ensure you are citing your sources correctly using APA 7th edition. All assignments including discussion posts should be formatted in APA with the appropriate spacing, font, margin, and indents. Any papers not well formatted would be returned back to you, hence, I advise you review APA formatting style. I have attached a sample paper in APA format and will also post sample discussion responses in subsequent announcements.
Your initial discussion post should be a minimum of 200 words and response posts should be a minimum of 150 words. Be advised that I grade based on quality and not necessarily the number of words you post. A minimum of TWO references should be used for your initial post. For your response post, you do not need references as personal experiences would count as response posts. If you however cite anything from the literature for your response post, it is required that you cite your reference. You should include a minimum of THREE references for papers in this course. Please note that references should be no more than 5 years old except recommended as a resource for the class. Furthermore, for each discussion board question, you need ONE initial substantive response and TWO substantive responses to either your classmates or your instructor for a total of THREE responses. There are TWO discussion questions each week, hence, you need a total minimum of SIX discussion posts for each week. I usually post a discussion question each week. You could also respond to these as it would count towards your required SIX discussion posts for the week.
I understand this is a lot of information to cover in 5 weeks, however, the Bible says in Philippians 4:13 that we can do all things through Christ that strengthens us. Even in times like this, we are encouraged by God’s word that we have that ability in us to succeed with His strength. I pray that each and every one of you receives strength for this course and life generally as we navigate through this pandemic that is shaking our world today. Relax and enjoy the course!
Please read through the following information on writing a Discussion question response and participation posts.
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Important information on Writing a Discussion Question
- Your response needs to be a minimum of 150 words (not including your list of references)
- There needs to be at least TWO references with ONE being a peer reviewed professional journal article.
- Include in-text citations in your response
- Do not include quotes—instead summarize and paraphrase the information
- Follow APA-7th edition
- Points will be deducted if the above is not followed
Participation –replies to your classmates or instructor
- A minimum of 6 responses per week, on at least 3 days of the week.
- Each response needs at least ONE reference with citations—best if it is a peer reviewed journal article
- Each response needs to be at least 75 words in length (does not include your list of references)
- Responses need to be substantive by bringing information to the discussion or further enhance the discussion. Responses of “I agree” or “great post” does not count for the word count.
- Follow APA 7th edition
- Points will be deducted if the above is not followed
- Remember to use and follow APA-7th edition for all weekly assignments, discussion questions, and participation points.
- Here are some helpful links
- The is a great resource