Question1. Explain and estimate the price elasticity of demand for a good or service of your firm, or a firm of interest to you. (Not your learning team good or service though!) ? Estimate the price elasticity of demand by guessing at the effect of a 10% price change on the sales level. Formulate how the assumed 10% price change and the change in sales level are the only two facts you need to estimate price elasticity? Determine if the good or service tends to be elastic or inelastic, and the reasons why. ? Connect your estimate of price elasticity of demand to pricing decisions of the firm: should it raise or lower prices so as to maximize total revenues? Speculate how our analysis changes if we are maximizing profits rather than revenues. ? Estimate the income elasticity of demand by guessing at the effect of a 10% income change on the sales level. Formulate how the assumed 10% income change and the change in sales level are the only two facts you need to estimate the income elasticity. ? Determine if the good or service tends to be an inferior good or a normal good; if a normal good determine if it is a necessity or a luxury; and finally, explain the reasons why.

Question2. Explain and estimate the production for a good or service your firm produces (or a firm of interest to you). ? Explain the product, typical volumes, and typical prices? Explain the form of ownership of your firm: sole proprietorship, partnership, corporation, non-profit corporation, government enterprise, government agency, cooperative, association, franchise? Explain the inputs used in the production process: buildings, equipment, vehicles, labor (specialized skills or unskilled), land, raw materials? Explain the technology of the production process: automated or labor intensive, non-automated capital intensive, land intensive? Define the short run and the long run by identifying the inputs (or input) that define(s) and give examples of increasing marginal returns and diminishing marginal returns. ? If you have time and interest: Explain the method of control of inputs in your chosen firm: hierarchy, team production, worker discretion, quantitative or qualitative goals (on intermediate measures (cost reductions, sales contacts, orders) or final output [profits, sales volume, total revenues), direct monitoring; Explain the kind and degree of departmentalization: functional, multidivisional, matrix? Explain the degree of integration in the firm: vertical and horizontal? Explain future trends in the technologies, input supplies, and organizational form for your chosen firm