ECO5000 Economics for Managers Assignment University of Southern Queensland

Short Answer Questions/Problems (seven) at 5% each for 35% total
Covering Modules 2, 3, 4 & 5
Each question maximum length of one (1) A4 page, font size 12
Each question marked out of five (5)

Instructions : ECO5000 Economics for Managers Assignment

ECO5000 Economics for Managers

A cover page will go at the front of your assignment submission. It must contain the following information at a minimum: Name (in full), USQ student number.

The answer to each question shall have a maximum length of one (1) A4 page, font size 12. Content which goes over the one page limit per question will not be marked.

Maximum length of your submission shall therefore be eight (8) pages. References (if needed) should be placed at the end of your answer to each question.

Each question shall be marked out of five (5).

Files extensions that can be submitted are: doc, docx, rtf.

Title your file with your FULL complete name i.e. Surname first, then First
names.

Submission is through the Assignment 2 portal which will be on the front
page of the study desk.

Question 1

Carl is the lead engineer on a smart HVAC cooling system that works with minimal energy and is voice activated. Given the revolutionary nature of the system, it took many failed tries to create a system that actually worked, at a cost of $30,000. Now each unit sells for $6500 and it costs $5000 in raw materials and labour to produce.

(a) What costs should Carl take into consideration when deciding to service the order for an additional unit? Why? (2.5 marks)

(b) Carl receives an order for four new units for a customer, but when he takes the order to his manager, the manager is enraged and asks Carl why he wanted to produce something at a loss. What costs would the manager be looking at to come to this conclusion? (2.5 marks)

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Question 2

(a) Market approval in the US for new pharmaceutical products is a long, arduous, and expensive process. Once approved, patent protection keeps close substitute products from entering for some years. If the demand for a particular product is stable, what would you predict for the profitability after approval and prior to patent expiration? (2.5 marks)

(b) When a brand name drug’s patent protection expires, many generic producers are usually ready to enter the market. These firms’ products are close substitutes, they have similar production technologies, the regulatory hurdles to enter are not so great, and, within a few months, there are plenty of rivals. What would you predict for the profitability during these first few months after generic drug entry? (2.5 marks)

Question 3 :ECO5000 Economics for Managers Assignment University of Southern Queensland

(a) Discuss the sources of economies of scale in the airline industry. (2.5 marks)

(b) Define economies of scope and give an example. (2.5 marks)

Question 4

Qantas reported bumper profits in the first half of the 2017-18 financial year. Discuss the sources of its economic profit (2.5 marks) and the strategies it has used to achieve such success (2.5 marks).

Question 5

Discuss the impact of the weak Aussie dollar on Australia’s tourism industry (2.5 marks) and higher education sector (2.5 marks) in recent years.

Question 6

Explain the meaning of Nash equilibrium. Is the Nash equilibrium in the prisoner’s dilemma Pareto optimal? Why? (Note that our text may not mention the term Pareto optimality but it is worth taking a bit time to understand this term). (5 marks)

Question 7

Explain the nature and consequences of asymmetric information for each of the following cases. What options are available in each instance to reduce the problem?

(a) medical insurance (2.5 marks)
(b) market for used cars (2.5 marks)

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