economic principles to a business decision

Apply economic prin” rel=”nofollow”>inciples to a busin” rel=”nofollow”>iness decision. Select one situation from the items outlin” rel=”nofollow”>ined belowSituation A
Jenny, your niece, is a smart high-school student who wants to make smart choices for her future. Hearin” rel=”nofollow”>ing of your course in” rel=”nofollow”>in Busin” rel=”nofollow”>iness Economics, she has emailed you askin” rel=”nofollow”>ing for advice on whether to become a medical doctor and on the best location to practice it. She recognizes the high costs of tuition and the years of study in” rel=”nofollow”>involved in” rel=”nofollow”>in becomin” rel=”nofollow”>ing a doctor. She wants to evaluate if that career choice is an optimum decision for her. So she has asked you for advice.
Havin” rel=”nofollow”>ing read the in” rel=”nofollow”>introduction to Chapter 1 on page 3 of the textbook, you recognize the significance of such a career decision for Jenny. You decide to examin” rel=”nofollow”>ine the career choice in” rel=”nofollow”>in terms of the utility it provides to Jenny: return on in” rel=”nofollow”>investment as well as personal satisfaction of contributin” rel=”nofollow”>ing to the well-bein” rel=”nofollow”>ing of others. But to evaluate the utility, you also need to identify and quantify the total opportunity costs of the decision. You decide to educate yourself about the market for physicians in” rel=”nofollow”>in terms of supply and demand, elasticity, costs of production, pricin” rel=”nofollow”>ing, and normal profit. You want to provide Jenny with the most in” rel=”nofollow”>informed advice possible.

Situation B
Your neighbor Cin” rel=”nofollow”>indy wants to start a contractin” rel=”nofollow”>ing busin” rel=”nofollow”>iness for in” rel=”nofollow”>installin” rel=”nofollow”>ing solar panels. She has heard of the cost savin” rel=”nofollow”>ings that households and busin” rel=”nofollow”>inesses can make each year from in” rel=”nofollow”>installin” rel=”nofollow”>ing solar panels on the roofs. Cin” rel=”nofollow”>indy has also heard of government in” rel=”nofollow”>incentives for in” rel=”nofollow”>installin” rel=”nofollow”>ing solar panels. Bein” rel=”nofollow”>ing concerned about the environment and wishin” rel=”nofollow”>ing to reduce pollution, Cin” rel=”nofollow”>indy thin” rel=”nofollow”>inks in” rel=”nofollow”>installin” rel=”nofollow”>ing solar panels also serves a social purpose. But she does not want to risk her life’s savin” rel=”nofollow”>ings on a venture that might not succeed or become profitable enough. After hearin” rel=”nofollow”>ing from you about takin” rel=”nofollow”>ing this course in” rel=”nofollow”>in Busin” rel=”nofollow”>iness Economics, she decides to ask you for advice.
At first you were hesitant to give in” rel=”nofollow”>investment advice. Then you read the section “Losin” rel=”nofollow”>ing Money in” rel=”nofollow”>in the Solar Panel Industry” on pages 402-403 of the textbook, and the need for differentiation in” rel=”nofollow”>in Chapter 13. You realize there are more pieces to the decision than Cin” rel=”nofollow”>indy is considerin” rel=”nofollow”>ing. You decide to research the market in” rel=”nofollow”>in terms of supply and demand, elasticity, costs of production, pricin” rel=”nofollow”>ing, normal profit, and savin” rel=”nofollow”>ings for consumers. You want to provide Cin” rel=”nofollow”>indy with the most in” rel=”nofollow”>informed advice possible

Situation C
Cousin” rel=”nofollow”>in Edgar is always thin” rel=”nofollow”>inkin” rel=”nofollow”>ing of the next busin” rel=”nofollow”>iness idea. This time, he plans to in” rel=”nofollow”>invest in” rel=”nofollow”>in buyin” rel=”nofollow”>ing two gas stations. He reckons American consumers have come to accept the high gasolin” rel=”nofollow”>ine prices, and estimates world prices for gasolin” rel=”nofollow”>ine will in” rel=”nofollow”>increase even further due to in” rel=”nofollow”>increasin” rel=”nofollow”>ing high demand from India and Chin” rel=”nofollow”>ina. Besides, Cousin” rel=”nofollow”>in Edgar thin” rel=”nofollow”>inks he will make a good profit on the sale of convenience items at each station. But before buyin” rel=”nofollow”>ing the gas stations, he decides to ask for your advice sin” rel=”nofollow”>ince you are takin” rel=”nofollow”>ing this course in” rel=”nofollow”>in Busin” rel=”nofollow”>iness Economics. D
After hearin” rel=”nofollow”>ing of your takin” rel=”nofollow”>ing this course in” rel=”nofollow”>in Busin” rel=”nofollow”>iness Economics, your college friend has emailed you askin” rel=”nofollow”>ing for advice on openin” rel=”nofollow”>ing a restaurant. Your friend Rajeev remin” rel=”nofollow”>inded you of his popular recipes for Indian food, and shared his dream of buildin” rel=”nofollow”>ing a franchise busin” rel=”nofollow”>iness modeled on the RE Chang chain” rel=”nofollow”>in of restaurants. He reckons that creatin” rel=”nofollow”>ing special fusion recipes based on a popular ethnic cuisin” rel=”nofollow”>ine will provide the restaurant chain” rel=”nofollow”>in with sufficient differentiation to become profitable and to grow nationwide.
Luckily before you could fin” rel=”nofollow”>ind time to answer Rajeev’s email, you read the pieces on Starbucks and openin” rel=”nofollow”>ing a restaurant, on page 425 of the textbook. Recognizin” rel=”nofollow”>ing the costs and risks for Rajeev, you decide to research the market in” rel=”nofollow”>in terms of supply and demand, elasticity, production costs, pricin” rel=”nofollow”>ing, normal profit, and the supply chain” rel=”nofollow”>in for ethnic cuisin” rel=”nofollow”>ine. You decide to educate yourself about the restaurant busin” rel=”nofollow”>iness so you can provide Rajeev with the most in” rel=”nofollow”>informed advice possible.

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