You are Marketing Manager for Bud Beer, produced by the Budweiser Division of

Anheuser-Busch, the brewing company with the highest market share in the United States. The

second-highest market share belongs to Miller’s Beer, produced by Miller Brewer Company. So you know that Miller’s is your most-important competitor. You also know that watching football on TV makes beer more enjoyable. Therefore Bud sales (the demand for Bud Beer—quantity of Bud Beer demanded, number of six-packs per week) depends on the price of Bud beer (dollars per six-pack), the price of Miller’s Beer (dollars per six-pack), and TV football (number of football games on TV per week). Currently, the level of Bud sales is eight million six-packs weekly.

Here are three scenarios, which are independent of each other; so they should be answered separately. Parts (a) and (b) of scenarios 1 and 2 are each worth one point, and scenario 3 is worth one point. Thus a total maximum point score of five.

Scenario 1. The CEO asks you to predict the increase in Bud sales if Bud price is reduced by ten percent. You have to make a sensible prediction.

(a) In the context of this scenario, what elasticity information do you need? (i) Name this elasticity (ii) Define this elasticity.

(b) What assumptions must you make using this elasticity for your prediction? Explain your answer.

Scenario 2. The CEO has learned that Miller will reduce the price of its beer by five percent. The CEO wants to know the effect on Bud sales if she does not reduce the price of Bud beer and if TV football is unchanged. Your staff informs you that the cross-price elasticity of the demand for Bud beer with respect to the price of Miller’s beer is 2.

(a) Why is this elasticity positive (+2) rather than negative (-2)? Explain thoroughly.

(b) What is the new level of Bud sales (number of six-packs per week)? Show your computation.

Hint: Be sure to distinguish between the change in sales and the new level of sales.

Scenario 3. The National Football League announces that TV football will increase from 95 games to 105 games. Your staff informs you that, assuming the price of Bud beer and the price of Miller’s beer do not change, Bud sales will increase from eight million to ten million weekly.

Using the “midpoint method,” compute the “elasticity of demand for Bud beer with respect to TV football.” Show your computation.

***SHOW ALL WORK*** You are Marketing Manager for Bud Beer, produced by the Budweiser Division of Anheuser-Busch, the brewing company with the highest market share in the United States. The second-highest market share belongs to Miller’s Beer, produced by Miller Brewer Company. So you know that Miller’s is your most-important competitor. You also know that watching football on TV makes beer more enjoyable. Therefore Bud sales (the demand for Bud Beer—quantity of Bud Beer demanded, number of six-packs per week) depends on the price of Bud beer (dollars per six-pack), the price of Miller’s Beer (dollars per six-pack), and TV football (number of football games on TV per week). Currently, the level of Bud sales is eight million six-packs weekly. Here are three scenarios, which are independent of each other; so they should be answered separately. Parts (a) and (b) of scenarios 1 and 2 are each worth one point, and scenario 3 is worth one point. Thus a total maximum point score of five. Scenario 1. The CEO asks you to predict the increase in Bud sales if Bud price is reduced by ten percent. You have to make a sensible prediction. (a) In the context of this scenario, what elasticity information do you need? (i) Name this elasticity (ii) Define this elasticity. (b) What assumptions must you make using this elasticity for your prediction? Explain your answer. Scenario 2. The CEO has learned that Miller will reduce the price of its beer by five percent. The CEO wants to know the effect on Bud sales if she does not reduce the price of Bud beer and if TV football is unchanged. Your staff informs you that the cross-price elasticity of the demand for Bud beer with respect to the price of Miller’s beer is 2. (a) Why is this elasticity positive (+2) rather than negative (-2)? Explain thoroughly. (b) What is the new level of Bud sales (number of six-packs per week)? Show your computation. Hint: Be sure to distinguish between the change in sales and the new level of sales. Scenario 3. The National Football League announces that TV football will increase from 95 games to 105 games. Your staff informs you that, assuming the price of Bud beer and the price of Miller’s beer do not change, Bud sales will increase from eight million to ten million weekly. Using the “midpoint method,” compute the “elasticity of demand for Bud beer with respect to TV football.” Show your computation.

A is the CEO of B Ltd. He is quite unhappy as he figured that the profits for the last three years were declining despite increasing sales. He approached you to seek advice on the cost accounting numbers and income statement prepared by his accountant. He supplies you the following information: Particulars 2017 2018 2019 Sales (at $20 per unit) $1,000,000 1,100,000 $1,200,000 Less: Cost of goods sold Opening stock 50,000 200,000 250,000 Add: Cost of production Variable 260,000 240,000 160,000 Fixed (allocated) 390,000 360,000 240,000 Less: Closing stock 200,000 250,000 50,000 Cost of goods sold (before adjusting for production volume variance) 500,000 550,000 600,000 Adjustment for production volume variance (30,000) 0 120,000 Actual Cost of goods sold (after adjustment for production volume variance) 470,000 550,000 720,000 Gross profit 530,000 550,000 480,000 Less: Selling expenses (semi-variable) 490,000 530,000 570,000 Operating profit / (loss) 40,000 20,000 (90,000) Actual production for the last three years was as follows. 2017: 65,000 units, 2018: 60,000 units, and 2019: 40,000 units. The opening stock as of 1st January 2017 was 5,000 units. Fixed manufacturing overheads were allocated to production based on budgeted activity of 60,000 units every year. Actual fixed overheads for each of the three years was $360,000 (per annum). Required: (a) Prepare a marginal costing income statement which would help you understand the performance of Victoria Ltd. (b) Calculate and advise A of the breakeven point for B Ltd. (c) Prepare a numerical reconciliation of the profit numbers that you calculated in requirement (a) and the profit numbers calculated by B Ltd’s accountant. (d) In order to help A better understand the financial affairs of this business, explain the reasons in two brief points about the differences in profit numbers obtained from your marginal costing calculations and the profit numbers calculated by B Ltd’s accountant.

A group of shareholders claimed that the mean tenure for a CEO was at least nine years. A survey of 81 companies found a sample mean tenure of 7.9 years with a standard deviation of 6.4 years. Using the p-value approach, perform the appropriate test at ?=0.10.

Suppose that the owner and CEO of a firm that operates in a PERFECTLY COMPETITIVE market environment comes to see you for help. She has question to ask you as her best Economist friend.

(i)    After talking to another economist friend, Mary, my question, she says, is: “And then this morning Mary said that after the market responds to our current extra-ordinary economic profit, that we may be in a position where our Total Revenue, TR is less that our Total Cost, TC. I said that was awful, we would have to Shut Down! But Mary said, no we won’t because our Total Revenue will still be greater than our Total Variable Cost, TVC. Can you explain WHY this result matters to me and what I should do, please?

Can you please explain the answer thoroughly and in detail for my understanding?

Imagine yourself as the CEO of a large firm in an industry in which you are interested. Please (1) identify major trends in the general environment, (2) analyze their impact on the firm, and (3) identify major sources of information to monitor these trends

Suppose that you are the CEO of a discount airline that caters to students on tight budgets who want to travel to warm locations when the weather gets cold. Currently, your airline flies small regional jets from the MBS International Airport to 6 cities in Florida. Assume that your airline has a monopoly on the local market.

1. List the conditions that apply to monopolies, and briefly describe how they apply to this airline. (6 points)
2. Using the table below, determine the profit maximizing number of passengers that you should serve out of the MBS market. The price is for a round-trip ticket. (8 points)

3. Suppose that your fixed costs are $50,000, and your variable costs are $100 per passenger. Would you ever consider shutting down the airline? At what point would you do this and why? (8 points)

3. Suppose that your airline was competing with 3 other airlines for the passengers wanting to fly to Florida. How would you determine what fare to charge? Would you collude with your competitors? Why or why not? (8 points)

Suppose that you are the CEO of a discount airline that caters to students on tight budgets who want to travel to warm locations when the weather gets cold. Currently, your airline flies small regional jets from the MBS International Airport to 6 cities in Florida. Assume that your airline has a monopoly on the local market.

1. List the conditions that apply to monopolies, and briefly describe how they apply to this airline. (6 points)
   
2. Using the table below, determine the profit maximizing number of passengers that you should serve out of the MBS market. The price is for a round-trip ticket. (8 points)

3. Suppose that your fixed costs are $50,000, and your variable costs are $100 per passenger. Would you ever consider shutting down the airline? At what point would you do this and why? (8 points)

3. Suppose that your airline was competing with 3 other airlines for the passengers wanting to fly to Florida. How would you determine what fare to charge? Would you collude with your competitors? Why or why not? (8 points)

Question 5:

The CEO of a small firm believes that there is a relationship between the number of client contacts and the dollar value of sales. To document this assertion, she gathered the following sample information. The X column indicates the number of client contacts last month, and the Y column shows the value of sales ($ thousands) last month for each client sampled.

(a) What is the correlation between Y and X?

(b) Determine the coefficients (i.e., the a and b values) of the regression equation Y = a + bX .

(c) Interpret the values of a and b.

(d) Using the estimated regression equation, determine the estimated sales if 45 contacts are made.