Economics for Managerial Decision Making
Economics for Managerial Decision Making Dannielle Strupler ECO - 561 Economics – Puerto Rico University Of Phoenix September 18, 2012 Dr. Wanda Marrero, Ph.D.
Economics for Managerial Decision Making Decision making is amongst the main functions of managers within the business world today; even more particularly during these times of economic crises. Decisions such as pricing strategies targeted to particular market models of monopoly, oligopoly, monopolistic competition, and perfect competition, may help maximize revenues and profits. Also making the right choice when investing in technology, research and development, and marketing tactics can deeply impact a business’ profits and ultimately, its success or failure (McConnell & Brue, 2008). Pricing and Non Pricing Strategies Pricing tactics across the different markets have a strong impact on profits; decisions regarding pricing are strongly tied to the type of market being run. For instance, in a monopolistic market an increase in price will be followed by a decrease in demand. Given the fact that the product may not be trusted by consumers a highly priced article will create a negative effect on demand. Even though in this type of market the business is the price maker, cost must not be passed on to the consumer in order to increase revenue either. It is necessary to invest in manufacturing technology improvement and in marketing in order to stimulate demand, lower costs, and improve productivity, hence increasing profits (McConnell & Brue, 2008). This is represented in Quasar’s simulation where, while being a monopoly player, they were unable to pass on to their customers their increased costs as it would have been translated into a lower demand. They had to optimize their production processes (University of Phoenix,
Economics for Managerial Decision Making Decision making is amongst the main functions of managers within the business world today; even more particularly during these times of economic crises. Decisions such as pricing strategies targeted to particular market models of monopoly, oligopoly, monopolistic competition, and perfect competition, may help maximize revenues and profits. Also making the right choice when investing in technology, research and development, and marketing tactics can deeply impact a business’ profits and ultimately, its success or failure (McConnell & Brue, 2008). Pricing and Non Pricing Strategies Pricing tactics across the different markets have a strong impact on profits; decisions regarding pricing are strongly tied to the type of market being run. For instance, in a monopolistic market an increase in price will be followed by a decrease in demand. Given the fact that the product may not be trusted by consumers a highly priced article will create a negative effect on demand. Even though in this type of market the business is the price maker, cost must not be passed on to the consumer in order to increase revenue either. It is necessary to invest in manufacturing technology improvement and in marketing in order to stimulate demand, lower costs, and improve productivity, hence increasing profits (McConnell & Brue, 2008). This is represented in Quasar’s simulation where, while being a monopoly player, they were unable to pass on to their customers their increased costs as it would have been translated into a lower demand. They had to optimize their production processes (University of Phoenix,
References: McConnell, C.R., & Brue, S.L. (2008). Economics (17th ed.). Retrieved from https://ecampus.phoenix.edu/content/eBookLibrary2/content/eReader.aspx. University of Phoenix. (2002). Economics for Managerial Decision Making: Market Structures [Multimedia]. Retrieved from University of Phoenix, ECO561 - PR Economics website. CERTIFICATE OF ORIGINALITY I certify that the attached paper is my original work. I am familiar with, and acknowledge my responsibilities which are part of, the University of Phoenix Student Code of Academic Integrity. I affirm that any section of the paper which has been submitted previously is attributed and cited as such, and that this paper has not been submitted by anyone else. I have identified the sources of all information whether quoted verbatim or paraphrased, all images, and all quotations with citations and reference listings. Along with citations and reference listings, I have used quotation marks to identify quotations of fewer than 40 words and have used block indentation for quotations of 40 or more words. Nothing in this assignment violates copyright, trademark, or other intellectual property laws. I further agree that my name typed on the line below is intended to have, and shall have, the same validity as my handwritten signature. Student’s signature (name typed here is equivalent to a signature): Dannielle Strupler