Economics

Entering a Merger and Organizational Form" Please respond to the following:

• From the scenario for Katrina's Candies, examine the major implications for firms entering into a merger. Explain the criteria the U.S. Department of Justice and the Federal Trade Commission would follow when deciding on whether or not to approve a proposed merger.

Impact of Government Regulation" Please respond to the following:

This week let's step from the fictional world of Katrina's Candies into the real world. This is a chance for you to use the economics you have learned to analyze real-world issues.

In 1993, Whitman and Russell Stover candy companies announced merger plans. I didn't work on this merger, but two of my colleagues were hired by the candy companies to determine whether the FTC should/would sue to stop the deal. In your discussion response, please give an answer to one or more of the following questions. Check back in during the week to see if you can contribute more.

Questions:

If you were an economist for the FTC or the candy companies, how would you go about determining whether the merger breaks the antitrust laws?

Which law is applicable?

What is the relevant market you would analyze? (That is, which products and which geographic area(s) would you focus on? In other words, how would you label the horizontal axis of you supply and demand curve graph? Hint: What product do both companies sell?)

Are you trying to determine whether the merger might tend to make prices rise or fall?

What evidence would you gather to analyze this issue?

Think about these questions with the economics you know. Don't worry about getting the "right" answer. Good economists could come to different conclusions on these questions. I'm primarily interested in getting you to use the economics you've learned to answer real-world questions. You'll get full credit if you participate in a thoughtful way.

"Long-Term Investment and Cost-Benefit Analysis" Please respond to the following:

• From the scenario for Katrina's Candies, suggest one method in which Herb could use a cost-benefit analysis to argue for or against an expansion. Create three optimal decision rules for Katrina's Candies (e.g., whether to hire more staff or hire temporary workers to meet production schedules). Assess both the short-term and the long-term costs and benefits of obtaining a graduate degree. Support your decision to obtain a graduate degree with a cost-benefit analysis of your particular situation.