Questions from Managerial Economics

Q: When China reformed state-owned enterprises, it tried a new

When China reformed state-owned enterprises, it tried a new approach to choosing managers: it put managerial jobs up for auction. The bids for the jobs consisted of promises of future profit streams t...

Q: Soft selling occurs when a buyer is skeptical of the usefulness of

Soft selling occurs when a buyer is skeptical of the usefulness of a product and the seller offers to set a price that depends on realized value. For example, suppose you’re trying to sell a company a...

Q: Which of the following is an example of vertical integration?

Which of the following is an example of vertical integration? a. A custom software company purchasing a competing software firm b. A soft drink producer buying a brand of iced tea c. A coal producer p...

Q: In the magazine Budget Travel, a hotel maid admits, “

In the magazine Budget Travel, a hotel maid admits, “I cut corners everywhere I could. Instead of vacuuming, I found that just picking up the larger crumbs from the carpet would do. Rather than scrub...

Q: Your product fails about 2% of the time, on average

Your product fails about 2% of the time, on average. Some customers purchase the extended warranty you offer in which you will replace the product if it fails. Would you want to price the extended war...

Q: A colleague tells you that he can get a business loan from

A colleague tells you that he can get a business loan from the bank, but the rates seem very high for what your colleague considers a low risk loan. a. Give an adverse selection explanation for this,...

Q: Lightweight personal locator beacons are now available to hikers that make it

Lightweight personal locator beacons are now available to hikers that make it easier for the Forest Service’s rescue teams to locate those lost or in trouble in the wilderness. How will this affect th...

Q: Suppose that every driver faces a 1% probability of an automobile

Suppose that every driver faces a 1% probability of an automobile accident every year. An accident will, on average, cost each driver $10,000. Suppose there are two types of individuals: those with $...

Q: BPO Services is in the business of digitizing information from forms that

BPO Services is in the business of digitizing information from forms that are filled out by hand. In 2006, a big client gave BPO a distribution of the forms that it digitized in house last year, and B...

Q: Frequent flyer programs are targeted more toward business travelers (who do

Frequent flyer programs are targeted more toward business travelers (who do not pay for their own tickets) than leisure travelers (who do). Explain their effect on each type of traveler. Why is there...