BUS 620Answer the following questions1 GR Dry Foods Distributor specializes in the wholesale distribution of dry goods, such asrice and dry beans The firm’s manager is concerned about an article he read in thismorning’s WSJ The article indicated that the incomes of individuals in the lowest incomebracket are expected to increase by 10 percent over the next year While the manager ispleased to see the group doing well, he is concerned about the impact this will have onthe business What is likely to happen to the price of the products GR Dry Foods sellsand why? Be sure to include a brief discussion of the topic and why it is that particulardiscussion Also, explain the short-term versus long-term decision, if applicable
2 The owner of a small chain of gasoline stations in a large Midwestern town read an articlein a trade publication that the price-elasticity-of-demand for gasoline in the US is -02Because of this, he is thinking about raising prices to increase revenues and profits Hehas asked for your recommendation on this strategy What would you recommend, andwhy? Show any calculations you determined Explain why elasticity is important forbusiness decision making
3 Suppose a CEO’s goal is to increase profitability and output from her company bybolstering its sales force and that it is known that profits as a function of output are p =40q– 2q2 (in millions of US dollars) Graph the profit function Compare and contrastoutput and profits using the following compensation schemes, based on the assumptionthat sales managers view output and profits as “goodsâ€:a The company compensates sales managers solely based on outputb The company compensates sales managers solely based on profitsc The company compensates based on the combination of output and profitsProvide all calculations with the comparison and contrast discussion
4 In the aftermath of a hurricane, an entrepreneur took a one-month leave of absence(without pay) from her $5,000-per-month job in order to operate a kiosk that sold freshdrinking water During the month she operated this venture, she paid the government$2,500 in kiosk rent and purchased water from a local wholesaler at a price of $134 pergallon If consumers are willing to pay $225 to purchase each gallon of fresh drinkingwater, how many units will she have to sell in order to turn a profit? Provide yourcalculations and explain how this can be applied to other businesses
5 Last month, you assumed the position of manager for a large car dealership Thedistinguishing feature of this dealership is its “no-hassle†pricing strategy; prices (usuallywell below sticker) are posted on the windows, and your sales staff has a reputation fornot negotiating with customers Last year, the company spent $2 million onadvertisements to inform customers about its “no-hassle†policy and had revenues of$40 million A recent study from an ad agency indicates that for each 3 percent increasein TV advertising expenditures, a car dealer can expect to sell 12 percent more cars, butthat it would take a 4 percent decrease in price to generate the same 12 percent increase in units sold Assuming the information is correct, should you increase ordecrease your firm’s level of advertising? Explain Show all calculations and provide thereasoning as clearly and concisely as possible
6 Based on the articles you read for class which one was the most important and why?