Managerial Economics Assessment PDF

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ASSESSMENT 1 Discuss and integrate microeconomics and macroeconomics in making managerial decisions by citing examples. (5pts.) We should provide economic method and scientific reasoning to solve managerial decision problems. That is why these two approach is important: the microeconomic and macroec...

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ASSESSMENT 1 1. Discuss and integrate microeconomics and macroeconomics in making managerial decisions by citing examples. (5pts.) We should provide economic method and scientific reasoning to solve managerial decision problems. That is why these two approach is important: the microeconomic and macroeconomic approach. Microeconomics studies phenomena related to goods and services from the perspective of individual decision-making entities (household and businesses). It is essential for understanding the behavior of atomic entities in an economy. However, understanding the systematic interaction of the many households and businesses would be too complex to derive from descriptions of the individual units. Macroeconomics approach is the same phenomena at an aggregate level. The macroeconomic approach provides measures and theories to understand the overall systematic behavior of an economy. Since managers must consider the state of their environment in making decisions and the environment includes the overall economy, an understanding of how to interpret and forecast micro- and macroeconomic measures is useful in making managerial decisions. The micro environment in marketing includes all those micro factors that affect business strategy, decision making and performance. It is vital for business success to conduct macro environment and micro environment analysis before decision-making process. Macro environment factors include political, economic, social, technological, and legal factors. On the other hand, company micro environment factors include customers, suppliers, competitors, employees, shareholders and media. 2. How does the scarcity of resources affect the firm’s decision making? Justify your answer through discussing specific situations. (5pts.) Scarcity is one of the most important aspects of business and economics. It has the potential to affect how businesses utilize resources, manufacture their products and address their personnel requirements. Understanding scarcity and how it could affect you is essential for successfully managing a business. Like for example, scarcity of exported products resulting from an embargo on imports of materials used in production, refusal of pharmaceutical companies to manufacture drugs that do not incur significant profits, resulting in scarcity of those medications, insufficient corn harvests due to poor weather which results in insufficient food supply and ethanol for fuel, or scarcity of high-level skilled workers due to insufficient or substandard education. Scarcity of resources affects decision making because instead of deciding to do that it will be altered because of the present condition of the environment. If there are less economic resources, businesses may need to revise their plans for their businesses. 3. Does regulating a firm will be significant for making optimal use of the resources and production of goods and services? (5pts.) “Regulation policy” refers to how regulations in practice are made, maintained, and evaluated. Regulations are indispensable to the proper function of economies and societies. They create the “rules of the game” for citizens, business, government and civil society. They underpin markets, protect the rights and safety of citizens and ensure the delivery of public goods and services. If applied effectively, regulation can foster a thriving, competitive marketplace where innovation and technological progress flourish. If executed poorly, regulation can stifle creativity and learning and limit opportunities for all employees.

4. Having said that most firms chose to maximize their profit, do you think it is a hindrance in their contribution to economic welfare? Justify your answer. (5pts.) A company enters a social contract with society as whole, an implicit agreement among all members to cooperate for social benefits. Even as a company pursues the maximizing of profit, it must also acknowledge that all of society will be affected to some extent by its operations. In return for society’s permission to incorporate and engage in business, a company owes a reciprocal obligation to do what is best for as many of society’s members as possible, regardless of whether they are businessmen. Therefore, when applied specifically to a business, the social contract implies that a company gives back to the society that permits it to exist, benefiting the community at the same time it enriches itself. https://www.marketingtutor.net/micro-environment-definition-factors-example/ https://medium.com/@megha0111/how-scarcity-affects-the-decision-making-c891df0fd560 https://www.indeed.com/career-advice/career-development/what-is-scarcity https://www.ced.org/reports/regulation-and-the-economy https://www.mercatus.org/publications/regulation/regulation-and-economic-growth https://opentextbc.ca/businessethicsopenstax/chapter/ethics-and-profitability/

ASSESSMENT 2 1. Complete the chart below by using the steps of the economic decision making.

Situation

Define the Problem

Determine the Objective Explore the

The ABCD Grill House is selling an average of 200 units of grilled whole chicken per day using the electric griller but there will be an electric interruption within the area during their operating hours and so, it will affect their grilled chicken production for that day. The firm also expects an increase in the demand for grilled chicken considering that many households also use an electric powered stove and buying cooked meat will be their alternative. The problem is the anticipated electric interruption within the area of ABCD Grill House that during their operating hours, it may possibly affect their grilled chicken production. The decision maker needs to find an alternative to their electric griller since they cannot be able to use it in the day of power interruption. It must be efficient in order for the ABCD Grill House to operate effectively without any disruption for them to sustain the capability to provide grilled chicken to their customers. The objective is to still produce minimum of 200 units of grilled chicken for that day even there is an electric interruption. They also aim to meet the demand because there is a possibility of increase in demand of chicken in the day of power interruption, since many households may not be able to use their electric appliances. The alternative action of the firm is to buy an electrical generator to produce

Alternatives

Predict the Consequences

Make a Choice

Perform Sensitivity Analysis

the electricity that the electric griller needs during the power interruption. One alternative is to buy a charcoal grille that will serve as an alternative equipment for the electric griller during the power interruption. Electrical Generator It is a costly equipment that will be a huge investment for the firm. It will probably minimum estimated amount of 20,000 pesos plus the fuel. The disadvantage is, it is not cost efficient and have limited usage, but it’s a longterm investment, is also safe, and will not harm the environment. Using the generator, the firm can still use its electric griller with the same process and speed. If the firm will choose the electrical generator, they can surely sustain the demand of customers during the electric interruption, but then they cannot assure to have a high expected profit in that day due to costly expense for the said equipment. Charcoal Modeled Griller This course of action costs much lower with a minimum estimated amount of 10,000 pesos plus the charcoal needed. Charcoal modeled griller will not operate as fast as the electrical griller but man power can be used to boost the production. Employees need to have fast transition of work for them to operate it well for the production to be sustained. It is also a long-term investment that can still be used even without electricity. But, this alternative produces smoke that can affect the near houses and establishment that is why the firm must consider the space and safety in their environment. In conclusion, it will be cost efficient, however it needs man power to have a fast production and it is not environmental friendly. The preferred course of action is buying the electrical generator because the main objective of high production that can sustain the high demand in that particular day is definitely attained in this alternative. It may not initially attain the profit, but it is possible in the future operations since electrical generator is a long term and effective investment for business. The firm will never have an interruption from that day until their future operations even electricity is outage since they have that useful equipment as immediate source of electricity. In this alternative the profit and budget are the probable risks, but it is much safe, provide assurance to objectives and highly effective. It may be a huge investment, but it will provide the most effective present and future benefits for the firm. The primary feature of the problem is focusing on high production and increased in demand which allowed to the investment to electrical generator as the optimal choice of action. Electrical generator is the best alternative compared to charcoal modeled griller since the main condition is production and demand. If the condition in the problem is altered and it will be focusing about attaining high profit in that specific day, charcoal modeled griller will be the optimal decision since it has lower cost and high production can still be attained through the fast work and process from the workers. Choosing electrical generator as an alternative is the optimal decision due to the facts that it provide less rick that the other alternative wherein it is safe for the environment, efficient for the production process, and long-term effective compared to charcoal modeled griller which is harmful to the environment as

well as risky to the health of people and the employees and there is no assurance when it comes to production or even profit. The optimal decision of choosing the electrical generator is also sensitive to key economic variables because it will help the firm to avoid the problem in unemployment which is the decision maker cannot control or maybe uncertain. Generally, the optimal solution will still be the electrical generator because even it is affected by economic facts and conditions it is can still highlight its efficiency and effectivity for the present and future production and operation on the firm. 2. How do you see the partnership between government and private firms in producing public goods? Does it convert to efficiency of the government programs? Justify your answer. Answer: https://www.investopedia.com/terms/p/public-private-partnerships.asp...