Economic Principles and Decision Making
Learning Outcomes
- Interpret and successfully apply economic concepts of supply and demand for effective organisational problem solving.
- Apply quantitative methods to forecast complex business variables including demand, supply, production and costs.
- Critically analyse production processes and cost functions and classify the main forms of market structures as well as recommend appropriate pricing and strategies.
- Critically evaluate the role and impact of various forms of government intervention in the economy including the implications of competition and deregulation policy for managerial practices.
Problem A:
The Board of Schmeckt Gut was interested in the demand for our energy bars in Atollia. Therefore, the Board instructed the Research Department of Schmeckt Gut to conduct a survey in Atollia. The results of the survey are provided in Table 1.
Table 1 - Survey results for Atollia
|
Annual average demand of energy
bars per person
|
Average income per person
|
Tariff rate on imports of energy bars
|
Number of stores where energy bars are
offered
|
|
106
|
15500
|
5
|
15
|
|
90
|
15810
|
5
|
15
|
|
93
|
16395
|
5
|
15
|
|
92
|
16887
|
5
|
15
|
|
91
|
17495
|
5
|
15
|
|
110
|
18282
|
5
|
16
|
|
109
|
19013
|
5
|
16
|
|
122
|
19508
|
5
|
16
|
|
82
|
19898
|
10
|
16
|
|
84
|
20276
|
10
|
16
|
|
102
|
20702
|
10
|
17
|
|
92
|
21550
|
10
|
17
|
|
115
|
22197
|
10
|
20
|
|
112
|
22330
|
10
|
20
|
|
109
|
22754
|
10
|
20
|
|
148
|
23619
|
7.5
|
20
|
|
143
|
23855
|
7.5
|
20
|
|
139
|
24452
|
7.5
|
20
|
|
158
|
24941
|
7.5
|
23
|
|
142
|
25514
|
7.5
|
23
|
|
158
|
25948
|
7.5
|
23
|
Using the results of the survey provided by the Research Department, see Table 1, the Board would like you to investigate the demand for our energy bars in Atollia in more detail. More specifically the Board is interested what the impact of offering our products at another store might have on the demand.
Hint A: You should make use of Microsoft Excel tools discussed in the Module End Learning Activities of Modules 1 to 3.
Hint B: You should run a linear regression analysis to investigate the potential impact of offering our product at another store.
Problem B:
The members of the Board of Schmeckt Gut are scheduled to meet with the Trade Minister of Industria. The Board is interested in convincing the Government of Industria to establish closer economic links with Atollia.
Based on the regression results that you have estimated as part of Problem A, what can we tell the Trade Minister about the impact of the tariff?
Use an applicable diagram discussed in Module 4 to explain the impact of the tariff on our energy bars.
Problem C:
The Board of Schmeckt Gut wants to convince the Government of Industria that a Free Trade Agreement with Atollia would be beneficial for Industria's economy.
1. Develop a brief for the Board on the benefits of Free Trade for both countries and industria in particular. Incorporate the results of your regression analysis and use theory and graphical support.
Attachment:- Data.xlsx