Project 2: Managerial Economics

Project 2 Report

Title Page

Name

Course and section number

Faculty name

Submission date

First Revision Changes (if necessary)

Second Revision Changes (if necessary)

Supply and Demand

1. Explain why an understanding of the law of demand and the law of supply is important to being an effective manager.

2. Identify the supply factors that are most important in determining the market equilibrium for the Deluxe box.

3. Identify the demand factors that are most important in determining the market equilibrium for the Standard box.

Market Structure

1. Explain why an understanding the market structure in a which company operates is important to being an effective manager.

2. Explain the market structure that is most likely operating in the market for the Deluxe boxes.

3. Explain the market structure that is most likely operating in the market for the Standard boxes.

Price Elasticity

1. Discuss what actions the company should take in setting the price of the Standard box given its price elasticity of demand.

2. Discuss what actions the company should take in setting the price of the Deluxe box given its price elasticity of demand.

3. Assuming the price elasticity of supply for the Standard box is inelastic, explain the key factors that the company must consider in expanding production.

Profit Maximization

1. Explain under what conditions profit maximization would be appropriate for the Standard box.

2. Explain why the concepts of marginal revenue, marginal cost and economies of scale are important to the financial objective of maximizing profit.

3. Assuming the company only manufactures these two product lines and they have customers who purchase both products from them, discuss what the overall company financial objective should be.

Economics and Decision Making

1. Explain how an understanding of economics is important to being an effective manager.

2. Explain why understanding the economic concept of opportunity cost is essential to managers making better decisions.

3. Explain why understanding the economic concepts of marginal revenue and marginal cost are essential to managers making better decisions.