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BUSI 620 Week 4 Questions for Critical Thinking 4 (SOLUTIONS) To Purchase This Material Click below Link http://www.busi620mentor.com/product-36-BUSI-620Week-4-Questions-for-Critical-Thinking-4-(SOLUTIONS)

FOR MORE CLASSES VISIT www.busi620mentor.com Business 620 Critical Thinking Four Salvatore’s Chapter 8: a) Discussion Questions: 2 and 10. b) Problems: 3, 11,12 and spreadsheet problem 1 (p. 357).

Salvatore’s Chapter 9: a)

Problems: 7, 11, and spreadsheet problem 1.

Froeb et al.’s Chapter 9: a) Individual problems: 9-2, 9-3 and 9-4.

Froeb et al.’s Chapter 11:


a) Individual problems: 11-4 and 11-5.

Discussion Question 2: a) What is the distinction between marginal cost and incremental cost? b) How are sunk costs treated in managerial decision making? Why?

Discussion Question 10: What are the aim, usefulness, and shortcomings of a) Cost-volume-profit analysis and b) The concept of operating leverage?

Problem 3:Airway Express has an evening flight from LA to NY with an average of 80 passengers and a return flight the next afternoon with an average of 50 passengers. The plane makes no other trip. The charge for the plane remaining in NY overnight is $1,200 and would be zero in LA. The airline is contemplating eliminating the night flight out of LA and replacing it with a morning flight. The estimated number of passengers is 70 in the morning and 50 in the return afternoon flight. The one-way ticket for


any flight is $200. The operating cost of the plane for each flight is $11,000. The fixed cost for the plane is $3,000 per day whether it flies or not. a) Should the airline replace its night from LA with a morning flight? b) Should the airline remain in business?

Problem 11: The Goldberg- Scheinman Publishing Company is publishing a new managerial economics text for which it has estimated the following total fixed and average variable costs.

Total fixed costs: Copy editing Typesetting Selling and promotion 10,000 70,000 20,000 Total fixed costs: $100,000 Average variable costs:


Printing and binding Administrative costs Sales commissions Bookstore discounts Author’s royalties 6 2 1 7 4 Average variable costs $20 Project selling price $30

Determine the breakeven output and total sales revenues and draw the cost-volume-profit chart Determine the output that would generate a total profit of $60,000 and the total sales revenues at that output level; draw the cost-volume-profit chart.


Spreadsheet problem 1: For the following table, calculate in Excel the average fixed costs (AFC), the average variable cost (AVC), the average total costs (ATC), and the marginal costs (MC).(note total fixed cost=$30)

Salvatore’s Chapter 9: a) Problems: 7, 11, and spreadsheet problem 1. Problem 7: From figure 9-4, determine the effect of a 33 percent tariff on commodity X

Problem 11: Most book publishers pay authors a percentage of the revenue from book sales. Explain the conflict that this creates between publishers and authors.

Spreadsheet problem 1: If the market supply function of a commodity is QS=3,250 and a) the market demand function is QD=4,750-50P is expressed in dollars, use Excel to calculate values QD and QS for P from 25 to 50 in 1’s. b) If the market demand increased to Q’D=5,350-50P, what is the equilibrium price? c) If the market demand decreased to Q’’D=4,150-50P, what is the equilibrium price?


d) For (a)-(c), if TC=0.005Q2-Q, what is the profit in each case?

Froeb et al.’s Chapter 9: a) Individual problems: 9-3 and 9-4. Individual Problem 9-2 Because beer and marijuana are seen as substitutes, beer sellers would have opposed the legalization of marijuana. But since snack foods are a complement to marijuana, snack food sellers would have been in favor of legalization of marijuana.

‘Individual problem 9-3: Snack food vendors and beer distributors earn some monopoly profits in their local markets but see them slowly erode from various new substitutes. When CA voted on legalizing marijuana, which side do you think that California beer distributors were on? What about the snack food vendors? Why?

Individual problem 9-4: Relative to managers in more monopolistic industries, are managers in more competitive


industries more likely to spend their time on reducing costs or pricing strategies?

Froeb et al.’s Chapter 11: a) Individual problems: 11-4 and 11-5. Individual problem 11-4: How does a decrease in US interest rates affect the EU/US exchange rate?

Individual problem 11-5: How will a dollar devaluation affect businesses and consumers in the twin cities of El Paso, US and Juarez, Mexico?


Busi 620 week 4 questions for critical thinking 4 (solutions)