Economics for managers is a course that is widely popular among students. And why shouldn’t it be, eh? After all, the managers also have to consider the “cost” section when they have to handle the business operations, right?
But it so happens that the assignment 2 in ECO5000 is a bit over the head for some students. Therefore, I bring to you an ECO5000 assignment answers guide.
The question decoded.
This question has a firm that is selling novelty baseball cards. Your job was to manage the production of 100,000 cards per week. 4 lines handling 25,000 cards per week is good. Now you have to raise it to 150,000 cards per week.
The proposed solution in the question is to employ a shift from 4 pm to midnight. The payment for this extra shift is time and a half.
You have to analyse in ECO5000 assignment 2 answers that what this change will affect the shape of the short-run marginal cost curve. Moreover, you also have to see how will this affect the pricing.
How should you answer it?
Read the information properly. Yes, for real. Read it again and again and jot down everything that you can summarise from the question. These details are really useful when you are writing ECO5000 assignment 2 answers.
See that if the new contract terms are long term or are short term. As far as I can read, it says that the new order is long term stress on the word “at least temporarily”. It does not mean that the new order will last one or two weeks and then back to square one. It will last a good amount of time.
What options ECO5000 assignment 2 answers have?
So, there is an option to either install a new production line. Or you can give overtime to the workers for their work.
After drawing a comparison between the costing in installing a new production line and then hiring the workers v/s giving overtime, it can be sensed that the latter is cheaper. The short-run goal is to compete for the demand in ECO5000 assignment 2 answers.
When you will install a new line and then hire workers, you are going to incur more cost than overtime pay. The long run will be more beneficial through the former but that is not what the question is asking, is it?
The question decoded.
You are Nora who owns a shop called Nicest Knick Knacks selling souvenirs. Earlier you sold only tee-shirts with local sayings. Now you sell coffee mugs, key chains, spoons, etc. For every product, you have one or more suppliers.
You have to see how these suppliers affect the value she extracts from the business.
How should you write ECO5000 assignment 2 answers?
Again, read the question file over and over again. Identify the information given and think about what more data you need. Look for principles and theories that govern producer-supplier behaviour in the market. Check how the availability of one or more suppliers for each product affects the running of the business.
Imagine you are a baker and buy bread from one source only for $6 per loaf. One day they send out a notice to you charging $10 per loaf. A couple of months they raise it to $11 per loaf. What are you going to do? Either change the supplier or raise your prices.
Same happens in ECO5000 assignment 2 answers.
One man army.
It is said that Nora’s business was limited to tees only and she had only one supplier. In such a case, the supplier would charge whatever price they wish. Since Nora has the only supplier, she is vulnerable to the risk of going out of business. What could the poor soul do.
But now she has more products and more suppliers. As a result, nobody can ask her for whatever money they want. Nora got other options as well. These alternatives prevent the creation of a monopoly and offers a healthy competition. Nora’s risk has reduced, she is less vulnerable now and allow her to source the raw material for her shop at a lower cost.
And all ends well when Nora eats a big piece of the pie that her firm has generated in profits in ECO5000 assignment 2 answers.
The question decoded.
A local bar called Honkytonk has $5 cover charge on weekends. Hank brings in live musical acts which is popular among the customers. Yet, Hank loses money on weekends after acts.
You have to identify his marginal revenue and the marginal cost of one person on weekend. Also, how can he fix his loss problem?
How to write ECO5000 assignment 2 answers?
Hank’s marginal revenue is the cover charge he charges for each entry. The problem of losing money is something that needs to be identified. Look into how Hank manages the weekends, what is his place management strategy, etc.
He also cannot fill the bar to full capacity. The only way to increase profits is to increase the cover charge. If the rise too much, the patrons will decline significantly. Therefore, Hank should find a way to reduce unwanted patrons and also increase the cover charge for profit.
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