Managerial Economics

Topic: Managerial Economics Order Description Case Assignments For each module you will need to complete case study questions from your text Managerial Economics and Organizational Architecture. Read the scenario provided in the text and then answer the questions provided Book: Brickley, J., Smith, C., & Zimmerman, J. (2016). Managerial economics and organizational architecture (6th ed.). New York: McGraw Hill/Irwin. I also prefer succinct, complete answers that convince me that you have prepared your writing with thought and reflection rather than to be concerned over having a certain number of pages. A complete answer should be supported with material from the text and/or other sources and be properly cited. If you can provide a complete, well-developed response in several paragraphs or a page that is acceptable (this means do not list answers in bullet points... you can separate the questions by number and in fact this does help me grade faster, but there should still be complete sentences). If it requires more than one page that is acceptable as well. Be aware that I will critique your written response not only on the technical part of your answer but also on the clarity and logical sequence of your response as well as grammar and spelling. I encourage and expect you to use textbook concepts as you attempt to explain in your own words the answers to the assignments. I will also be looking for word choice and sentence structure that is suitable for graduate level work. Analyzing Managerial Decisions: Rich Manufacturing Gina Picaretto is production manager at the Rich Manufacturing Company. Each year her unit buys up to 100,000 machine parts from Bhagat Incorporated. The contract specifies that Rich will pay Bhagat its production costs plus a $5 markup (cost-plus pricing). Currently, Bhagat’s costs per part are $10 for labor and $10 for other costs. Thus the current price is $25 per part. The contract provides and option to Ricoh to buy up to 100,000 parts at this price. It must purchase a minimum volume of 50,000 parts. Bhagat’s workforce is heavily unionized. During recent contract negotiations, Bhagat agreed to a 30 percent raise for workers. In this labor contract, wages and benefits are specified. However, Bhagat is free to choose the quantity of labor it employs. Bhagat has announced a $3 price increase for its machine parts. This figure represents the projected $3 increase in labor costs due to its new union contract. It is Gina’s responsibility to evaluate this announcement. 1- Why do many firms use cost-plus pricing for supply contracts? A: 2- What potential problems do you envision with cost-plus pricing? A: 3- Should Gina contest the price increase? Explain A: 4- Is the increase more likely to be justified in the short run or the long run? Explain A: 5- How will a $3 increase in the price of machine parts affect Gina’s own production decisions? A