Answer the 5th question plus 2 more from questions 1–4.
1.Before Sarah quit her job as a carpenter, she was earning $35,000 per year. She rented a
building for $12,000 per year and opened a cabinet shop. She spends $148,000 per year
for labor, materials, utilities, and advertising.
oHow much revenue will the business have to earn in order to break even in terms
of business profit?
oHow much revenue will the business have to earn in order to break even in
economic terms?
oSuppose that Sarah buys the building. Now how much will the business have to
earn in order to break even in economic terms?
2.What might be the objective of a museum? Of a firm? Do they have the same
objective? Why or why not?
The objective of a firm is to maximize wealth or the value of the firm by cutting costs and
increasing sales, while being subjected to various constraints. Although both a firm and a
museum may provide services and goods, their objectives differ. Johnson and Thomas
(1998) defined museums as “major repositories of a country’s stock of objects and
specimens of educational and cultural value” (p. 75). Therefore, a museum’s objective, as
a not-for-profit institution, is to create a cultural and educational value rather than a
monetary one. In order to meet their operating expenses, museums acquire capital from
fundraising and government tax money.
Johnson, B., & Thomas, P. (1998). The economics of museums: a research perspective. Journal
of Cultural Economics, 22, 75-85.
3.What is the difference between unethical and unlawful behavior? Please provide
examples for both behaviors in your discussion.
According to Salvatore (2015) unlawful behavior is the kind of behavior prohibited by law,
whereas unethical behavior may not be prohibited by law, but may bear unpleasant consequences
as well. Ethics should be a moral guide for organizations that goes beyond the law and penalizes
unethical behavior even if it is legal (p. 21). Murphy (2015) gives examples of 3 most common
illegal behaviors of organizations: hiring unpaid interns (if a company does not fit the criteria),
horizontal price agreements, and wage theft. Unethical behavior, on the other hand, may include
misusing company time, abusive behavior, employee theft, lying to employees, and violating
company’s Internet policy (Schwartz, 2015).
Murphy, N. (2015, August 5). 3 illegal things your employer may be doing. The CheatSheet.
Retrieved from http://www.cheatsheet.com/business/3-illegal-things-your-company-might-be-
doing.html/?a=viewall
Salvatore, D. (2015). Managerial economics in a global economy (8th ed.). New York, NY:
Oxford University Press.
Schwartz, A. (2015, Jan 26). The 5 most common unethical behaviors in the workplace.
Philadelphia Business Journal. Retrieved from
http://www.bizjournals.com/philadelphia/blog/guest-comment/2015/01/most-common-unethical-
behaviors-in-the.html
4.In your opinion, how much time should a consumer spend on shopping (searching) for
lower prices (you may want to apply the marginal analysis)?
5.According to Milton Friedman, "Business has only one social responsibility – to
make profits (as long as it stays within the legal and moral rules of the game
established by society). Few trends could so thoroughly undermine the very
foundations of our society as the acceptance by corporate officials of a social
responsibility other than to make as much money for their stockholders as
possible." Explain why you agree or disagree with such a statement.
Additional information:
Milton Friedman was the recipient of the Nobel Memorial Prize in Economic Sciences in
1976.
"Not looking to your own interests but each of you to the interests of the others"
(Philippians 2:4, NIV).
Target’s community giving: "Target has a long-standing tradition of strengthening
families and communities through innovative programs and partnerships. Since 1946, we
have contributed 5 percent of our annual income to support families and communities,
and today we remain one of very few companies that maintain this level of sustained
giving. Target gives more than $3 million each week to the communities in which we do
business. Our giving is directed both by Target and by the Target Foundation, each with
specific areas of focus and commitment" (From Target’s website).
You must submit your thread by 11:59 p.m. (ET) on Thursday of Module/Week 1 and your reply
by 11:59 p.m. (ET) on Sunday of the same module/week.
