THE PEACH COMPUTER COMPANY Donald Bright, supply manager at the Peach Computer Company, was preparing his notes for a meeting to be held that afternoon. The meeting concerned the construction of a new $6 million, 120,000-square-foot building to be located near Dayton, Ohio. The principle issue to be discussed, and hopefully resolved, was what method of specification the firm should use in the purchase of its new building. When the requirement for the building first arose, the plant engineer at Peach advocated the use of a design firm as the desired method of developing the specifications. Such firms were employed successfully by Peach on seven previous construction projects it had completed during the past five years. Under this approach, a design firm, traditionally referred to as an architect-engineer or simply A-E, is retained to develop the detailed plans and specifications for the new building. These specifications are identical in concept to the materials and method-of-manufacture specifications used in the manufacturing industry to purchase manufactured goods. After they are developed and approved, the construction plans and specifications in sequence become (1) the basis for solicitation of bid prices from qualified construction firms, (2) the cardinal part of the resulting construction contract, and (3) the standard against which inspections are performed. Don had conducted some preliminary discussions with members of the Dayton Institute for Supply Management regarding the cost for A-E services. He learned that the fees for local projects similar to his were averaging 8 percent of estimated construction cost. This percentage was in line with Peach’s experience on its own projects. One of the members of the Dayton chapter with whom Don talked suggested that he read an article in an issue of the California Management Review (CMR). The article, entitled “Inflation, Recession, and Your Building Dollar,” dealt with the purchase of building construction. Don learned that several alternative approaches to supplying building construction were available. One approach particularly appealed to him. It provided for the use of performance specifications. Such specifications, instead of describing the building item by item in terms of its physical properties, describe in words the building’s intended function, i.e., how large it must be; how well lighted, heated, and cooled it must be; its longevity; its operating costs; and so on. After the performance description is developed, it is used to solicit from qualified bidders a package proposal that includes (1) a design approach, (2) a firm agreed price, and (3) a guaranteed completion date. The CMR article documented that when properly used, performance specifications for buildings can result in a significant savings in both dollars and time. Additionally, the article data revealed that when this method is correctly used, a considerable savings in both the cost and the time required to complete the project is a reasonable expectation. Furthermore, the article indicated that the buyers of buildings purchased under this method have experienced approximately equal satisfaction with their buildings as those who used A-E’s. In preparation for the afternoon meeting, Don decided to develop lists of advantages and disadvantages for each of the two approaches he was considering. After an evaluation of both lists, Don expected to be able to make a formal recommendation as to which method he thought Peach should employ.
1. Should Don get any additional information? Explain.
2. Discuss the inherent advantages and disadvantages of using performance specifications.
3. Discuss the inherent advantages and disadvantages of the plans and specifications method of describing quality.
4. Assuming that Don’s investigation and analysis indicates that both methods are practical for use by Peach, discuss which approach Don should recommend.
5. Explain why one method will require more active involvement on Don’s part than the other approach.
In: Operations Management
Evian Corporation is a private corporation formed for the purpose of providing
the products and the services needed to irrigate farms, parks, commercial projects,
and private homes. It has a centrally located factory in a U.S. city that manufactures the
products it markets to retail outlets across the nation. It also maintains a division that
provides installation and warranty servicing in six metropolitan areas.
The mission of Evian is to manufacture quality parts that can be used for effective
irrigation projects that also conserve water. By that effort, the company hopes to satisfy
its customers, provide rapid and responsible service, and serve the community and
the employees who represent them in each community.
The company has been growing rapidly, so management is considering new ideas to
help the company continue its growth and maintain the high quality of its products.
Evian was founded by Will Winkman who is the company president and chief
executive officer (CEO). Working with him from the company’s inception was Will’s brother,
Ben, whose sprinkler designs and ideas about the installation of proper systems have been
a major basis of the company’s success. Ben is the vice president who oversees all aspects
of design and production in the company. The factory itself is managed by Todd Senter who hires his line managers to supervise the factory employees. The factory makes all of the parts for the irrigation systems. The purchasing department is managed by Hector Hines.
The installation and training division is overseen by vice president Henry Writer, who
supervises the managers of the six local installation operations. Each of these local managers
hires his or her own local service people. These service employees are trained by the home
office under Henry Writer’s direction because of the uniqueness of the company’s products.
There is a small Human Resources department under the direction of Sally Fenton,
a vice president who handles the employee paperwork, though hiring is actually performed
by the separate departments. Sam Totter is the vice president who heads the sales
and marketing area; he oversees 10 well-trained salespeople.
The accounting and finance division of the company is headed by Abe Headman, who
is the chief financial officer (CFO) and a company vice president; he is a member of the
Institute of Management Accountants and holds a certificate in management accounting.
He has a small staff of Certified Public Accountants, including a controller and a treasurer,
and a staff of accounting input operators who maintain the financial records.
A partial list of Evian’s accounts and their balances for the month of November 2012 follows.
Accounts Receivable $ 245,000
Advertising Expenses 54,000
Cash 250,000
Depreciation—Factory Equipment 16,800
Depreciation—Office Equipment 2,400
Direct Labor 42,000
Factory Supplies Used 16,800
Factory Utilities 10,200
Finished Goods Inventory, November 30 67,700
Finished Goods Inventory, October 31 72,500
Indirect Labor 48,000
Office Supplies Expense 1,600
Other Administrative Expenses 72,000
Prepaid Expenses 41,250
Raw Materials Inventory, November 30 52,600
Raw Materials Inventory, October 31 38,300
Raw Materials Purchases 184,500
Rent—Factory Equipment 47,000
Repairs—Factory Equipment 4,500
Salaries for the office workers 325,500
Sales 1,225,000
Sales Commissions 40,500
Work In Process Inventory October 31 52,700
Work In Process Inventory, November 30 41,000
Instructions for part 1
(a) Based on the information given, construct an organizational chart of Evian
Corporation. (see illustration 1-2 in text)
(b) A list of accounts and their values are given above. From this information, prepare a cost of goods manufactured schedule, a cost of goods sold schedule, an income statement, and the current assets section of the balance sheet for Evian Corporation for the month of November 2012. (see illustrations in the text)
Part 2
Evian has two major public-park projects to provide with comprehensive
irrigation in one of its service locations this month. Job J57 and Job K52 involve 15 acres
of landscaped terrain which will require special-order sprinkler heads to meet the specifications
of the project. Using a job cost system to produce these parts, the following
events occurred during December 2012:
Raw materials were requisitioned from the company’s inventory on December 2 for
$4,995; on December 8 for $960; and on December 14 for $3,306. In each instance, two-
thirds (2/3) of these materials were for J57 and the rest for K52.
Six time tickets were turned in for these two projects for a total amount of 18 hours
of work. All the workers were paid $16.50 per hour. The time tickets were dated December 3,
December 9, and December 15. On each of those days, 6 labor hours were spent on these
jobs, two-thirds (2/3) for J57 and the rest for K52.
The predetermined overhead rate is based on machine hours. The expected machine
hour use for the year is 2,112 hours, and the anticipated overhead costs are $842,688
for the year. The machine were used by workers on projects K52 and J57 on December 3, 9,
and 15. Six machine hours were used for project K52 (2 each day), and 8.5 machine hours
were used for project J57 (2.5 the first day and 3 each of the other days). Both of these
special orders were completed on December 15, producing 235 sprinkler heads for J57
and 145 sprinkler heads for K52.
Additional job order activities during this period of time included:
Dec. 1 Purchased raw materials from Durbin Supply Company on account for $53,200.
Dec. 2 Issued $42,000 of direct materials from the company’s inventory to jobs other than K52 and J57 and $3,000 of indirect materials.
Dec. 12 Paid Evian’s factory salaries and wages in the amount of $67,000.
Dec. 13 Paid the factory’s water bill of $3,000.
Dec. 18 Transferred $50,000 of costs from other completed jobs to finished goods.
Dec. 21 Paid the factory’s electric bill of $12,000 for factory.
Instructions for part 2
(a) Set up the job cost sheets for Job No. J57 and Job No. K52. Determine the total cost for each manufacturing special order for these jobs. (Round unit cost to nearest cent.)
(b) Journalize the activities from these job cost sheets in the general journal. Also journalize the other costs that occurred during this period of time.
(c) Assuming that Manufacturing Overhead has a credit balance of $3,400, determine whether overhead has been under/over applied and make the adjusting entry.
Part 3
Because most of the parts for its irrigation systems are standard, Evian handles
the majority of its manufacturing as a process cost system. There are multiple process
departments. Three of these departments are the Molding, Cutting, and Welding departments.
All items eventually end up in the Package department which prepares items for
sale in kits or individually.
The following information is available for the Molding department for January.
Work in process beginning: 22,000 units , Total costs in beginning work in process $252,854
Costs in work in process inventory: Materials $168,020, Labor 67,564, Overhead 17,270
Units started into production in January 60,000
Units completed and transferred-out in January 58,000
Costs added to production: Materials $264,940, Labor 376,188, Overhead 60,578 =Total costs added into production in January $701,706
Work in process ending:
Units in process 24,000
Stage of completion for materials 100%
Stage of completion for labor and overhead 30%
Instructions for part 3
(a) Prepare a production cost report for Evian using the weighted-average method.
Part 4
Direct labor or machine hours may not be the appropriate cost driver for overhead
in all areas of manufacturing due to the complexities of many manufacturing
processes. Many companies use activity-based costing (ABC) which uses multiple drivers
(items that consume resources) rather than just one driver to apply overhead to their
activities. With ABC, a company can use a cost driver that has a direct cause/effect relationship
in its applied overhead costs.
Evian looked into ABC as a method of costing because of the variety of items it
produces and the many different activities in which it is involved. The activities listed
below are a sample of possible cost pools for Evian.
Assembling
Payroll
Billing
Plant supervision
Digging trenches
Purchasing materials
Machine maintenance
Selling
Machine setups
Testing
Molding
Welding
Packaging
Instructions for part 4
(a) For each of these cost pools, what would be the likely activity cost driver?
(b) Using the following information, determine the overhead rates and the actual cost assigned for each of the activity cost pools in a possible ABC system for Evian.
EVIAN CORPORATION
Expected
Use of Actual
Estimated Cost Drivers Use of
Activity Cost Pools Cost Drivers Overhead per Activity Drivers
Irrigation installation Labor cost $1,999,500 12,900 12,941
Machining (all machine use) Machine hours 1,670,400 33,408,000 33,409,000
Customer orders # of orders 30,636 2,553 2,520
Shipping none (direct) N/A traced directly
Design Cost per design 820 10 7
Selling Number of calls 372,300 21,900 22,100
(d) (1) The results of ABC can provide a more accurate picture of costs. Discuss the value of Evian using this system to determine overhead costs.
(2) How might using ABC affect decision making at Evian?
In: Accounting
Salmone Company reported the following purchases and sales for its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using LIFO.
| Date | Activities | Units Acquired at Cost | Units Sold at Retail |
| May 1 | Beginning Inventory | 150 units @ $10.00 | |
| 5 | Purchase | 220 units @ $12.00 | |
| 10 | Sales | 140 units @ $20.00 | |
| 15 | Purchase | 100 units @ $13.00 | |
| 24 | Sales | 150 units @ $21.00 |
$2,260
$3,180
$1,860
$3,580
$2,100
In: Computer Science
Assume you have a product with the following parameters: Annual Demand = 360 units Holding cost per year = $1.00 per unit Order cost = $100 per order
a) What is the EOQ for this product?
b) In addition, assume a 300-day work year, how many orders should be processed per year?
c) What is the expected time between orders?
In: Operations Management
Consider a monopoly firm that faces the following demand curve, total cost curve, and marginal cost: P(Q) = 120 – 4Q; TC(Q) = 400 + 4Q; MC = 4
a. What is the marginal revenue (MR) equation?
b. Determine the profit maximizing level of production for this monopolist.
c. What is the price that the monopolist will charge at the profit maximizing level of production?
d. What is the monopolists’ profit at the profit maximizing level of output?
e. Suppose the government regulates the industry and forces the monopolist to produce at the socially optimal level, what will be the production level and price?
f. Suppose instead, the government decides to force the monopolist to charge a price equal to their average total cost, and the monopolist will produce 25 supply at this price, then what will be the monopolists profit?
In: Economics
Situation for Analysis: Grayslake Novelty produces and sells a small novelty item through tourist shops in Chicago and other northern Illinois locations. Last year the company sold 198,400 units. The income statement for Grayslake Novelty for last year is shown below:
|
Sales |
$992,000 |
|
Less: Variable Expenses |
545,600 |
|
Contribution Margin |
446,400 |
|
Less: Fixed Costs |
180,000 |
|
Net Operating Income |
$266,400 |
While the company has been profitable, as shown in the above income statement, sales began falling near the end of last year and have continued to decline this year. There is concern that new competitors are beginning to take market share from Grayslake Novelty. As a result, Sarah Burroughs, the company president, has asked you to provide some information to assist her in making decisions about the company’s strategy for this product. These alternatives should be evaluated individually as stated. You are free and encouraged to offer your own alternative based on any of the parameters given in the data.
Required:
a. While the company is currently profitable, the president wants to know the contribution margin and the breakeven in both units and dollars using last year’s level of sales. Additionally, compute the margin of safety, margin of safety ratio, and degree of operating leverage based on last year’s sales.
b. One of the possible strategies (Alt 1) is to reduce the current price by 8%. Using last year’s level of sales, what is the new contribution margin and break-even in units and dollars based on the price reduction? Additionally, compute the margin of safety, margin of safety ratio, and degree of operating leverage based on last year’s sales.
c. A second strategy (Alt 2) is to reduce the current variable cost by 0.20 per unit. The company has identified available efficiencies that can be implemented without any additional changes to the current cost. What is the new contribution margin and break-even in units and dollars based on the variable cost reduction of 0.20 per unit? Additionally, compute the margin of safety, margin of safety ratio, and degree of operating leverage based on last year’s sales.
d. A third strategy (Alt3) is to decrease the current price by 8% and reduce the variable cost per unit by 0.20. What is the new contribution margin and break-even in units and dollars based on making both changes? Additionally, compute the margin of safety, margin of safety ratio, and degree of operating leverage based on last year’s sales.
e. A fourth strategy (Alt 4) under consideration is to invest in more automated equipment for the manufacturing process. This investment will reduce variable costs by 0.65 per unit, primarily reducing the direct labor. At the same time, this will increase the fixed costs by $50,000. What is the new contribution margin and break-even in units and dollars based on this change in operating structure? Additionally, compute the margin of safety, margin of safety ratio, and degree of operating leverage based on last year’s sales.
f. A final strategy (Alt 5) is to change the current structure for the company’s sales person. The current fixed cost includes the salary of Grayslake’s one sales person at $60,000 per year. The company’s marketing study suggests that sales could be increased by 20% if the company hired an additional sales person; paid both individuals $40,000 fixed salaries; and a 0.25 commission per unit sold. What is the new contribution margin and break-even in units and dollars based on this change? Additionally, compute the margin of safety, margin of safety ratio, and degree of operating leverage based on last year’s sales as the starting point for this change.
This is a writing question:
Instructions:
Write a business memo addressed to the president recommending the best course of action based on your analysis. In your memo, discuss changes in break-even points, and impacts to the operating leverage. Including a table summarizing your findings would be appropriate. The company’s long-range plan is to grow sales to 250,000 units in the next two to three years. In your memo, summarize the advantages and disadvantages of each of the alternatives. Critically evaluate the alternatives based on current market conditions and any impact each alternative may have on the long-range plan.
Clearly state your recommended course of action explaining why your recommendation is the best for the company. Your memo should be at least one page, but no longer than two full pages. You should also attach an Excel spreadsheet that documents all your calculations. The calculations supporting your data and analysis must be included.
In: Accounting
Situation for Analysis: Grayslake Novelty produces and sells a small novelty item through tourist shops in Chicago and other northern Illinois locations. Last year the company sold 198,400 units. The income statement for Grayslake Novelty for last year is shown below:
|
Sales |
$992,000 |
|
Less: Variable Expenses |
545,600 |
|
Contribution Margin |
446,400 |
|
Less: Fixed Costs |
180,000 |
|
Net Operating Income |
$266,400 |
While the company has been profitable, as shown in the above income statement, sales began falling near the end of last year and have continued to decline this year. There is concern that new competitors are beginning to take market share from Grayslake Novelty. As a result, Sarah Burroughs, the company president, has asked you to provide some information to assist her in making decisions about the company’s strategy for this product. These alternatives should be evaluated individually as stated. You are free to offer your own alternative based on any of the parameters given in the data.
Required:
a. While the company is currently profitable, the president wants to know the contribution margin and the breakeven in both units and dollars using last year’s level of sales. Additionally, compute the margin of safety, margin of safety ratio, and degree of operating leverage based on last year’s sales.
b. One of the possible strategies (Alt 1) is to reduce the current price by 8%. Using last year’s level of sales, what is the new contribution margin and break-even in units and dollars based on the price reduction? Additionally, compute the margin of safety, margin of safety ratio, and degree of operating leverage based on last year’s sales.
c. A second strategy (Alt 2) is to reduce the current variable cost by 0.20 per unit. The company has identified available efficiencies that can be implemented without any additional changes to the current cost. What is the new contribution margin and break-even in units and dollars based on the variable cost reduction of 0.20 per unit? Additionally, compute the margin of safety, margin of safety ratio, and degree of operating leverage based on last year’s sales.
d. A third strategy (Alt3) is to decrease the current price by 8% and reduce the variable cost per unit by 0.20. What is the new contribution margin and break-even in units and dollars based on making both changes? Additionally, compute the margin of safety, margin of safety ratio, and degree of operating leverage based on last year’s sales.
e. A fourth strategy (Alt 4) under consideration is to invest in more automated equipment for the manufacturing process. This investment will reduce variable costs by 0.65 per unit, primarily reducing the direct labor. At the same time, this will increase the fixed costs by $50,000. What is the new contribution margin and break-even in units and dollars based on this change in operating structure? Additionally, compute the margin of safety, margin of safety ratio, and degree of operating leverage based on last year’s sales.
f. A final strategy (Alt 5) is to change the current structure for the company’s sales person. The current fixed cost includes the salary of Grayslake’s one sales person at $60,000 per year. The company’s marketing study suggests that sales could be increased by 20% if the company hired an additional sales person; paid both individuals $40,000 fixed salaries; and a 0.25 commission per unit sold. What is the new contribution margin and break-even in units and dollars based on this change? Additionally, compute the margin of safety, margin of safety ratio, and degree of operating leverage based on last year’s sales as the starting point for this change.
Submission Instructions:
Write a business memo (format is in the second document of this assignment) addressed to the president recommending the best course of action based on your analysis. In your memo, discuss changes in break-even points, and impacts to the operating leverage. Including a table summarizing your findings would be appropriate. The company’s long-range plan is to grow sales to 250,000 units in the next two to three years. In your memo, summarize the advantages and disadvantages of each of the alternatives. Critically evaluate the alternatives based on current market conditions and any impact each alternative may have on the long-range plan.
Clearly state your recommended course of action explaining why your recommendation is the best for the company. Your memo should be at least one page, but no longer than two full pages. You may also attach an Excel spreadsheet that shows all your calculations or you may embed your computations into the memo using tables. The calculations supporting your data and analysis must be included.
In: Accounting
Match each of the following activities with the appropriate quality cost classification (a–d).
Group of answer choices
Disposing of scrap
[ Choose ] Appraisal cost External failure cost Internal failure cost Prevention cost
Recalling defective products
[ Choose ] Appraisal cost External failure cost Internal failure cost Prevention cost
Performing warranty work
[ Choose ] Appraisal cost External failure cost Internal failure cost Prevention cost
Testing products
[ Choose ] Appraisal cost External failure cost Internal failure cost Prevention cost
Controlling vendor quality
[ Choose ] Appraisal cost External failure cost Internal failure cost Prevention cost
Processing returned merchandise
[ Choose ] Appraisal cost External failure cost Internal failure cost Prevention cost
Maintaining equipment
[ Choose ] Appraisal cost External failure cost Internal failure cost Prevention cost
Training operators
[ Choose ] Appraisal cost External failure cost Internal failure cost Prevention cost
In: Accounting
10. Suppose the development of new drought-resistant hybrid seed corn leads to a 50% increase in the average yield per acre without increasing the cost to the farmers who use the new technology. If the conditions in the corn industry are approximated by the price-taker model, which of the following will be likely to occur? (More than one answer is correct, list all correct answers) a. The market supply of corn will increase. b. The supply of soybeans (a close substitute for corn) will decrease. c. The price of corn will fall and the quantity demanded for corn will increase. d. The demand for corn will increase. e. The price of soybeans (a close substitute for corn) will decrease.
12. Assume that "PC Clone" computer makers are price takers operating in an increasing cost industry. If demand increases, initially the PC manufacturers will be able to make economic profits. What is likely to happen to these profits with the passage of time? (There is more than one correct answer). a. They will persist as long as the demand for personal computers is high. b. As computer makers compete for inputs (chips, disk drives, engineers, etc.), they will bid up input prices, which will increase costs and reduce their profitability. c. Once consumers know that the computer makers are earning profits, they will reduce their purchases, which will lead to a reduction in demand and a lower market price. d. New PC manufacturers will enter the industry over time, which will lead to an increase in supply and a reduction in computer prices until the profits are eliminated.
13. Which of the following statements is true when long-run equilibrium conditions are present in price-taker and competitive price-searcher markets? (Note for this problem, there is more than one correct answer). a. P= MC for price-taker, and P > MC for competitive price-searcher markets. b. P = MC in both price-taker and competitive price-searcher markets. c. P = ATC in both price-taker and competitive price-searcher markets, and at a point where ATC is at a minimum for price- taker markets but not at a minimum for price-searcher markets. d. Economic profits are zero for both price-taker and competitive price-searcher markets. e. Total Revenue = Total Cost for both competitive price-taker and price-searcher markets.
14. Which of the following statements about price discrimination is correct (more than one answer is correct)? a. A price discriminating firm will want to charge a higher price to the consumer group with the more elastic demand. b. A firm can usually increase its profits by price discriminating rather than charging the same price to all customers. c. Some consumers will pay a higher price when a firm is a price discriminator than would be the case if all customers were charged the same price. d. Compared to a single-price strategy, a firm that engages in price discrimination usually produces and sells a larger output. e. For price discrimination to be successful, firms generally have to be able to prevent re-sale of their products and control resentment.
15. Which of the following is a true statement about the difference between a price-taker firm and a competitive price-searcher firm in the long run (more than one answer is correct)? a. Both will sell their products at a price equal to average total cost, but only the price-searcher will produce at minimum average total cost. b. Both will sell their products at a price equal to marginal cost, and only the competitive price searcher will produce at minimum average total cost. c. Only the price-taker will sell its product at a price equal to marginal cost. d. Only the competitive price searcher will sell its product at a price equal to marginal cost. e. Both will sell their products at a price equal to average total cost, but only the price-taker will produce at minimum average total cost.
16. In some industries where firms experience declining average total costs over the full range of output that consumers are willing to buy (more than one answer is correct): a. a larger firm will very likely have lower per-unit costs. b. many rival firms will tend to emerge from the competitive process. c. a single large firm will likely develop, and it will have cost advantages that may protect it from potential rivals. d. a single large firm will develop and it will buy out any smaller rival firms because the small firms can produce at a lower per-unit cost. e. smaller firms will likely have per-unit costs that are similar to large firms.
17. In sparsely populated areas of the western United States, physicians often have some local monopoly power since the nearest doctor may be a hundred miles (or more) away. Physicians confronting this circumstance may be able to practice price discrimination, for example, by charging richer families more than poorer ones for the same services. If one such physician is willing to stay in the area only if he or she can earn at least $150,000 per year, and if price discrimination permits him or her do so, then economic reasoning suggests that such price discrimination would most likely (more than one answer is correct): a. make residents of the area worse off with regard to the purchase of physician services. b. make residents of the area better off with regard to the purchase of physician services. c. increase the number of physicians practicing in such sparsely populated areas. d. increase the options available to both the rich and poor families in the community.
19. Given that the short-run cost and demand conditions shown above for a competitive price-searcher firm are representative for all firms in the industry, which statements accurately describe this firm and industry (more than one answer is correct)? a. The firm’s Price will exceed ATC and it will be able to make short-run economic profits. b. The firms will face competition from new entrants into the industry, causing this firm's demand to decline until zero economic profits are restored. c. The firms will face competition from new entrants into the industry, causing this firm's demand to increase until it earns positive economic profits. d. The firm will see some of its competitors exit from the industry, causing this firm's demand to increase until zero economic profits are restored. e. The firm’s Total Revenue (TR) will exceed its Total Costs (TC) in the short-run.
20. If the government grants a single firm the patent right (monopoly) for the production of a good, such as a new cancer drug, then compared to the competitive outcome for such a good: a. the price of the cancer drug will be higher, less of the cancer drug will be produced, and the firm will earn positive profits. b. the price of the cancer drug will be lower, less of the cancer drug will be produced, and the firm may be able to earn positive economic profits. c. the price of the cancer drug will be higher, more of the cancer drug will be produced, and the firm may be able to earn positive economic profits. d. the price of the cancer drug will be higher, less of the cancer drug will be produced, and the firm will earn zero economic profits. e. none of the above
21. Assuming that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency? (More than one answer is correct.) a. The output of the monopolist will be too small and the price too high, compared to ideal market efficiency. b. The output of the monopolist will be too large and the price too high, compared to ideal market efficiency. c. The output of the monopolist will be too small and the price too low, compared to ideal market efficiency. d. The monopolist’s price will be too high, but the impact of monopoly on output is indeterminate. e. The unregulated monopolist will be in a position to charge a price greater than its ATC of production in the long-run.
22. Suppose that price is below the minimum average total cost (ATC) but above the minimum average variable cost (AVC) and that the market price is expected to rise at least to ATC in the near future. In the short run, a firm that is a price-taker would: a. immediately shut down and get out of the industry. b. continue to produce a quantity of output such that its marginal revenue equals marginal cost. c. shut down temporarily, in hopes of restarting in the near future. d. cut price and expand output in hopes of achieving economies of scale. e. None of the above.
23. Even though a cartel is often profitable for its members, cartel arrangements contain the seeds of their own disintegration because (more than one answer is correct): a. a price maintained above each cartel member's average variable cost provides each member with an incentive to offer secret price reductions to attract additional customers. b. the profits earned by cartel members will induce and attract new firms to enter the industry. c. cartel members will attempt to garner more of the total profit for themselves by cheating on their agreement with other members. d. cheating on cartel agreements by individual members may be difficult to detect and enforce. e. the demand for the products of cartels is inherently unstable relative to the demand for the products of non-cartel industries.
24. Suppose the airline industry is an oligopolistic market with significant barriers to entry. If this is true, we would expect that (more than one answer is correct): a. each airline will strategically set its own price and output by considering how other airlines might respond. b. if the number of airlines declined because of a series of mergers between major airlines, then collusive behavior in the industry leading to higher prices would be more likely. c. the airfares being charged will be greater than what would be charged in a competitive price-taker market with no entry barriers but less than what would be charged by a pure monopolist. d. the firms in the industry will not attempt to maximize profit.
26. People can travel within Washington, D.C., via the Metro subway system or by taxicabs. Suppose that taxi fares (prices) remain the same, while subway fares (prices) increase for the Metro system. How will the total revenue from subway and taxi travel be affected by the increase in subway fares? The total revenue (more than one answer is correct): a. from taxi fares will increase, and revenue from subway fares will increase, but only if demand for the subway is inelastic. b. from taxi fares will increase, and revenue from subway fares will increase, but only if demand is elastic. c. from subway fares will decrease, and revenue from taxi fares might either increase or decrease. d. from taxi fares will decrease, and revenue from subway fares might either increase or decrease. e. from taxi fares will increase, and revenue from subway fares might either increase or decrease.
27. Mexican Hut sells tacos and competes with its main rival Burger Queen, which sells hamburgers. If rising corn prices unexpectedly increase the cost of taco shells for Mexican Hut, which of the following statements are correct in the long run when market equilibrium is restored? (More than one answer is correct. Hint: Use graphs to help answer this question) a. The supply of Mexican Huts tacos will decrease, their price will increase; the demand for Burger Queen’s hamburgers will then increase, and their price will increase. b. The supply of Mexican Hut’s tacos will decrease, their price will increase and the quantity demanded for tacos will decrease. c. The supply of Mexican Hut’s tacos will decrease, while the quantity supplied of Burger Queen’s hamburgers will increase as the price of hamburgers increases; d. The price of tacos will rise and the quantity demanded for tacos will decrease; the price of hamburgers will increase as the supply of hamburgers increases; e. The price of burgers will rise, the demand for tacos will fall, and the quantity of tacos supplied will decrease.
29. If the price of sandals is fixed by law below the market-clearing price (Note: More than one answer is correct): a. a shortage of sandals will result. b. sandal inventories at shoe stores will be smaller than when the market price prevails. c. the quantity of sandals purchased will be less than the quantity purchased at the market price. d. the quantity of sandals supplied will be greater than the quantity supplied at the market price. e. the quantity of sandals demanded will be greater than the quantity supplied.
32. Economic analysis suggests that patent laws that can often be used to limit the entry of potential competitors into an industry (more than one answer is correct): a. redistribute income from consumers to business decision makers without affecting the allocation of resources. b. may be a source of business monopoly power, but they may also encourage innovation and the development of cost- reducing production techniques in the long run. c. encourage product development and the adoption of cost-reducing technologies in the short run but in the long run generally lead to business monopoly. d. help inventors at the expense of consumers in the short run. e. help consumers at the expense of inventors in the long run.
In: Economics
BMI as a vital sign. Insured that all patients in local community clinics had their height and weight measured at each visit through provider education and training and referral system development (reached over 7,500 clinic patients). ? Breastfeeding policy. Implemented policies to promote breastfeeding in clinics, educated patients and clinic employees on the value of breastfeeding, and built capacity for more certified lactation specialists. Documented rates of exclusive breastfeeding from 7.7% in January 2005 to 20.2% in November 2009 (reached 900 staff and patients). ? School menu standards. Improved school meal/menu program during and after school to ensure meal compliance with nutritional standards and needs. Improved menu offerings and ingredients (e.g., added salad bars, changed to baked fries, whole wheat flour, etc). Expanded Universal Breakfast to five schools. Monitored compliance of policies for healthy fundraising, healthy vending, and alternative classroom rewards and incentives (reached over 7,700 students). ? PE standards. Implemented, at five elementary schools, the California standards-based physical activity curriculum and Game Days during school (reached 3,450 students). ? Worksite wellness. Worked with employers to adopt and implement worksite HEAL policies in the workplace; all county departments now have a worksite wellness coordinator. Received the worksite wellness bronze award for its accomplishments. (reached 4,000 employees in several worksites). ? Corner market produce. Implemented a grocery store Healthy Produce Basket project in neighborhood stores. Provided owners with educational materials and free produce in a basket and worked to identify ways to maintain the flow of produce. Some stores began purchasing from distributers. Worked with youth to provide free produce deliveries to these stores from unsold farmers’ market products to assist stores build a customer base for fresh fruits and vegetables (reached 4200 residents). ? Resident gardens. Local women from the Healthy Birth Outcome (HBO) Project grew produce in their backyards. Piloted selling excess produce at a stand in the park with the intention of creating a farmer’s market (reached 160 residents). ? Farmer's market. Organized and developed a four-month annual certified farmers’ market in West Modesto. Worked with Heifer International, a local organization that donated farm land and staff, and Project Uplift, a youth development project, to train youth to grow and sell organic produce with other vendors (reached 625 residents). ? After-school physical activity. Implemented a number of programs to increase the amount of exercise students get in afterschool programs, including the SPARK curriculum (offered daily), Powerplay (offered three times per week), and “Walk It Out” (offered three times per week). Increased daily after-school activity time from 15% to 45% (reached 1800 students). ? Walking school bus. Created a walking school bus at one school that increased the number of students walking approximately one half mile to school each day. Increased safety awareness through adult supervision, influenced traffic abatement, and reduced student tardiness (75 students walking daily). ? BMI counseling. Developed a routine counseling system to promote weight reduction among patients identified as being overweight in health care clinics (reached 140 patients). ? Youth awareness. Promoted student awareness of the importance of healthy eating and physical activity through the Educational Theater Program, Walk to School assemblies and other events (reached 2080 students). ? Community awareness of safe physical activity programs. Developed healthy messages for partners to insert into flyers, newsletters, bus ads, billboards, articles in local newspaper, and events (reached 17,000 residents). ? Worksite wellness promotion. Developed and implemented worksite wellness programs to decrease consumption of unhealthy foods and beverages and promote physical activity among employees. Received a state worksite wellness bronze award for its accomplishments (reached 4,000 employees in several worksites). After reading the description CAREFULLY, please organize the various objectives employed in this evaluation into the "bands" of the social-ecological model. You should briefly indicate WHY you feel these strategies fall within the specific categories of the model. From the list of objectives you have placed in the model, pick one objective from EACH of the "bands" of the model. Describe how you would evaluate that objective. Would you use formative or summative methods (and why)? What types of study design (qualitative or quantitative) and specific techniques would you use to collect the data in order to evaluate that objective? What sort of sampling might you use for each data collection approach? Remember to argue for your choices!
In: Nursing