Managerial Economics: Concepts

Managerial economics, also known as business economics, involves applying economic principles to help businesses make decisions. It is an amalgamation of economic theory with business practices help management in future planning and decision making.

Questions and Answers on Managerial Economics

Question: Your weekly discussions uncovered many economic topics in the workplace. For the final project and presentation consider a change that you believe would be profitable for your company in the long run (with short run analysis too). If you are not currently working, you will be assigned one.

Your written report should include: Clear statement of the problem. Academic support of problem/solution (minimum of two, one can be your text). Industry support of problem/solution (minimum of two). Clear statement of proposed change(s) and expected outcome(s). The first page should be an Executive Summary using bullet points (this may be very similar to the sheet you use for your presentation). The report should be in APA format and include: Title page. Do not do an abstract, instead insert your Executive Summary here. Introduction. Literature review (academic and industry information that helps frame your recommendation). Empirical analysis (specific details regarding the problem and proposed solution – your introduction may have briefly described the problem, here you add more details). Conclusion: This may be brief and should include a restatement of problem and solution. You may also add any future considerations related to your recommendation that were outside the scope of the topic you investigated.

For your final presentation: You will have 3-5 minutes to present your recommendation to the class. Treat your professor as the CEO and the rest of the class as high level executives. You may only have one single sided sheet of paper to put on the document camera for the presentation (no PPT). If you have a chart, table and/or graph, you may have one additional single sided sheet that has only the chart, table or graph (max of 3 figures on the sheet). Note: Avoid putting too much information on your sheet(s). Do not write out lengthy bullet points, you should be prepared enough to look at a bullet to prompt you on what to speak about. Think about eye contact, voice volume and hand gestures.

Question) Task One: This task requires you to analyse the behaviour and performance of UK Supermarkets.

This task requires you to analyse the behaviour and performance of UK Supermarkets. In order to analyse the market, you MUST follow the outline below. Each item states the mark allocation and word limit.

1. As part of the introduction to your project, outline the sales trends in UK Supermarkets for at least, the past 3 years. You need credible and up-to-date data from sources such as Mintel.

2. Examine the structure of the market for UK Supermarkets. To do this, you should.

a) Identify the leading companies involved in the industry and their market shares.
b) Explain what kind of market structure UK Supermarkets operate in (e.g., monopoly, oligopoly, perfect competition), with supporting evidence.
c) Compare and contrast the market structure with the three other market structures you have studied based on price, output and profit.
d) Discuss the major barriers to entry in UK grocery retailing/supermarkets.

3. Firm performance: The COVID-19 pandemic has significantly impacted various sectors of the economy, but it has also presented enormous private sector opportunities and challenges globally.

a) Evaluate the impact of COVID-19 pandemic on the performance of UK grocery retailing. Performance could include the effects on price, demand, profits, etc.

Positive impact: e.g., higher demand for certain products (e.g. toilet paper, etc), causing prices and firms revenue to rise. Groceries or toilet papers are “essential” commodities, hence demand is inelastic.

Negative impact: e.g., some macroeconomic outcomes of the pandemic and associated lockdown measures? ….., slow economic growth…results in higher unemployment,……loss of households income……… low demand for ….certain products …….and……firms profits…

b) Using economic theories, provide recommendations to one particular firm operating in the UK grocery retailing markets on how to maintain a solid performance despite the economic downturn (i.e., decreased GDP, high unemployment, lower investment, etc.) of the pandemic. Your recommendations should focus on pricing, cost minimisation and profit maximisation strategies. Reinforce your suggestions with specific examples and explain the economic rationale.

Make sure you link what you are saying to an appropriate theory or concept. For instance, with pricing, which pricing strategy would maximise the performance of the business? – e.g., employing price discrimination, knowledge of price elasticity of demand.

Case Study:

Watch this BBC Report about “Arcadia collapses into administration with 13,000 jobs at risk – BBC News”

Debenhams set to close with 12,000 job losses – BBC News

So what went wrong? What could the managers have done right in terms of minimising costs or increasing profits?

4. As part of your conclusion, assess the future for the UK Supermarkets or grocery retailing market. Do you foresee future growth, stagnation, or decline?

Question: Task Two: This task requires you to read a series of case studies and answer them

Question: What is the significance of Managerial Economics?

Question: Define Marginal Cost. How is it calculated?

Question: What is Price Discrimination? Under what conditions is it possible?

Question: Distinguish between suppressed and open inflation.

Question: Critically examine Keynsian theory of employment. Try to give example.