Deck 1: Introduction: Economics and Management

Question 1

When would being first be a valuable strategy?

Answer 1

Economics:
Economics is the term, which have concerns regarding production, distribution, consumption, and transfer of wealth.
Determine why being first is a valuable strategy:
According to Person X, first mover makes the perfect footprint in the market and they can able to survive even if the demand declines. Most successful firms are the first movers who entered into the market segment when people expecting a product with the particular specification.
It will bring them a brand image for being the first firm to develop the market segment. It is equally important to upgrade the technology of the product. Being a first firm to introduce the product will create them a brand image. However, the companies, which enter into the segment later, would have the better technology and features. Thus, first mover should upgrade the product specification periodically to survive in the market.
Conclusion:
First mover has the equal advantages and disadvantages. The degree of risk will be high for the first mover firms. Choosing a production strategy would be a challenge for the company to produce the product, which the customers are expecting.

Question 2

The Dodd-Frank financial regulation law (enacted in 2010 in reaction to the 2008-2010 financial crisis) establishes tighter requirements for capital and restricts risk-taking. It also contains a significant consumer watchdog component and seeks to prohibit banks from becoming too big to fail. The so-called Volcker Rule-named after White House economic adviser and former Federal Reserve chairman Paul Volcker-restricts to 3 percent of Tier 1 capital the amount banks can hedge or put into private equity. Any financial entity that is deemed "too big to fail" is subject to regulation by the Federal Reserve. The costs of complying with the law are considerable. Many financial firms took write-downs in 2010 in anticipation of the effects of the law on their earnings.
How do firms subject to serious government regulation succeed?

Answer 2

Case summary:
A financial regulation law DF that is enacted in 2010 establishes the strong requirements on risk-taking and for capital. The law contains consumer watchdog component to protect banks from becoming too big to fail. Rule V restricts 3 percent of the capital of the banks. Financial organizations, which are considered as too big to fail, would be subject to the regulation of Federal Reserve.
Determine why companies, which follow serious regulation, succeed:
The companies, which take the regulations and governance of the government mostly, succeed in today's scenario. Companies without regulation will run the process and business in its own format, which may cause damage to the environment.
Regulations of the government usually structured with the consideration of environment, company, and other aspect. Thus, following government regulation will cause no harm to the society and to the company.
Conclusion:
Companies make or follow regulation that benefits them and the regulation, which creates them profit. Thus, it may harm the society or economy in any aspects.

Question 3

Would a focus on gaining market share make sense?

Answer 3

Economics:
Economics is the term, which have concerns regarding production, distribution, consumption, and transfer of wealth.
Determine whether the focus on market share make sense:
According to Person X, company focusing mainly on the market share does not make sense. Market share is not the route to the success. The market share of the firm will automatically increase if they obtained the brand image. The profit of the firm would not necessarily increase if the market share increases.
The company should focus on the quality, core competency, price, and features to be successful in the market.
Example:
Company A focused on the market share and lost its sight on attaining the profit. This leads to the failure of the firm. They kicked out of the market because of the bankruptcy.
Conclusion:
The example shows that the company should focus on the profit and other things. Focusing only on the market share will lead to the failure of the product or business in the market. They should concentrate on quality, core competency, and profit to survive.

Question 4

Look up the latest Business Week list of bestselling business books. What are five of the quick fixes suggested there?

Question 5

You are to decide whether to implement teams in this course. Describe the costs and benefits of having teams of students work together on papers, exams, and homework. Would you implement teams? Why or why not?

Question 6

What does it mean to say that economics focuses on the margin? What is the difference between average and marginal?

Question 7

In the following table, total cost is listed. Calculate marginal cost

Question 8

In the following table, total revenue is listed. Calculate marginal revenue.

Question 9

If economics assumes people are self-interested, then according to economics, why would executives, experienced in business and exposed to business practices over many years, be so quick to grab hold of a management fad?

Question 10

What does the phrase "there is no free lunch" mean?

Question 11

China is the world's most populous nation with 1.25 billion people. Firms look at that population as a huge customer base and are rushing to establish themselves in China. Is this appropriate for all firms? Why or why not?

Question 12

What is meant by the statement that "quality is not free"?

Question 13

How would you describe globalization? Thomas Friedman wrote a book called The World Is Flat that was published in April 2005. From the title, what would you suggest is his main thesis?

Question 14

Suppose the marginal cost of solving the global warming problem and the marginal benefit of doing so are listed below. How many degrees of temperature to be reduced are best for society to implement? Explain why?

Question 15

An entrepreneur quits a job where she was earning $60,000 per year and starts her own business. In this business she is earning $20,000. What is the cost of the business? Suppose the entrepreneur is so happy being on her own that she thinks it gives her the same joy that a $100,000 job would. What is the cost of the business?

Question 16

The Dodd-Frank financial regulation law (enacted in 2010 in reaction to the 2008-2010 financial crisis) establishes tighter requirements for capital and restricts risk-taking. It also contains a significant consumer watchdog component and seeks to prohibit banks from becoming too big to fail. The so-called Volcker Rule-named after White House economic adviser and former Federal Reserve chairman Paul Volcker-restricts to 3 percent of Tier 1 capital the amount banks can hedge or put into private equity. Any financial entity that is deemed "too big to fail" is subject to regulation by the Federal Reserve. The costs of complying with the law are considerable. Many financial firms took write-downs in 2010 in anticipation of the effects of the law on their earnings.
What is the significance of the title, "Hans Brinker or the Silver Skates"?