The Almost-Graduating Senior Problem. Consider this situation faced by a first-semester senior in civil engineering who is exhausted from extensive job interviewing and penniless from excessive partying. Mary’s impulse is to accept immediately a highly attractive job offer to work in her brother ’s successful manufacturing company. She would then be able to relax for a year or two, save some money, and then return to college to complete her senior year and graduate. Mary is cautious about this impulsive desire, because it may lead to no college degree at all! a. Develop at least two formulations for Mary’s problem. b. Identify feasible solutions for each problem formulation in Part (a). Be creative!

The Almost-Graduating Senior Problem. Consider this situation faced by a first-semester senior in civil engineering who is exhausted from extensive job interviewing and penniless from excessive partying. Mary’s impulse is to accept immediately a highly attractive job offer to work in her brother ’s successful manufacturing company. She would then be able to relax for a year or two, save some money, and then return to college to complete her senior year and graduate. Mary is cautious about this impulsive desire, because it may lead to no college degree at all! a. Develop at least two formulations for Mary’s problem. b. Identify feasible solutions for each problem formulation in Part (a). Be creative!

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter16: Bargaining

Section: Chapter Questions

Problem 2MC

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Consider this situation faced by a first-semester senior in mechanical engineering who is exhausted from extensive job interviewing and penniless from excessive partying. Mary’s impulse is to accept immediately a highly attractive job offer to work in her brother’s successful manufacturing company. She would then be able to relax for a year or two, save some money, and then return to college to complete her senior year and graduate. Mary is cautious about this impulsive desire, because it may lead to no college degree at all. Develop at least two formulations for Mary’s problem. Identify feasible solutions for each problem formulation in (a).
The Almost-Graduating Senior Problem. Consider this situationfaced by a first-semester senior in civil engineering who is exhaustedfrom extensive job interviewing and penniless from excessivepartying. Mary’s impulse is to accept immediately a highly attractivejob offer to work in her brother ’s successful manufacturing company.She would then be able to relax for a year or two, save some money,and then return to college to complete her senior year and graduate.Mary is cautious about this impulsive desire, because it may lead tono college degree at al a. Develop at least two formulations for Mary’s problem.b. Identify feasible solutions for each problem formulation in Part (a).Be creative!
You are the manager of Taurus Technologies, and your sole competitor is Spyder Technologies. The two firms’ products are viewed as identical by most consumers. The relevant cost functions are C(Qi) = 4Qi, and the inverse market demand curve for this unique product is given by P = 160 – 2Q. Currently, you and your rival simultaneously (but independently) make production decisions, and the price you fetch for the product depends on the total amount produced by each firm. However, by making an unrecoverable fixed investment of $200, Taurus Technologies can bring its product to market before Spyder finalizes production plans. Should you invest the $200? Explain.
Which of the following is FALSE regarding scenario and sensitivity analysis? Scenario analysis considers a best case (within reason) and worst case (within reason) scenario, along with a base case. Scenario analysis focuses on stand-alone risk, since it doesnt;s consider the project as a part of the larger firm. Sensitivity analysis considers that the project is one part of a larger firm Sensitivity analysis shows how changes in a single variable affects NPV or IRR Scenario analysis assumes all variables take their worst (reasonable) values simultaneously, and best (reasonable) values simultaneously.
Assume you are appointed head of the U.S. Department of Homeland Security in charge of preventing illegal crossings along a section of the U.S.-Mexico border. You have a weekly budget of $16,000. As a department head, you get satisfaction (or "utility") from preventing illegal border crossings and you have at your disposal two methods for preventing illegal crossings: 1) Hiring border security personnel to patrol strategic points along the border at a cost of $1000 per week per person or, 2) Purchase surveillance drones to patrol the border at a weekly cost of $3000 per drone. Based on the data attached in the picture below, explain whether you agree or disagree with the following statement made by a subordinate: "Based on the data, the department's "utility" is highest if we employ 16 security personnel because drones are just too expensive."
You are the manager of Taurus Technologies, and your sole competitor is Spyder Technologies. The two firms’ products are viewed as identical by most consumers. The relevant cost functions are C(Qi) = 2Qi, and the inverse market demand curve for this unique product is given by P = 110 −3 Q. Currently, you and your rival simultaneously (but independently) make production decisions, and the price you fetch for the product depends on the total amount produced by each firm. However, by making an unrecoverable fixed investment of $100, Taurus Technologies can bring its product to market before Spyder finalizes production plans. (Assume Taurus Technologies is the leader in this scenario.) What are your profits if you do not make the investment? $ What are your profits if you do make the investment? Instructions: Do not include the investment of $100 as part of your profit calculation. $
A risk-averse manager is considering two projects. The first project involves expanding the market for bologna; the second involves expanding the market for caviar. There is a 10 percent chance of a recession and a 90 percent chance of an economic boom. During a boom, the bologna project will lose $10,000, whereas the caviar project will earn $20,000. During a recession, the bologna project will earn $12,000 and the caviar project will lose $8,000. If the alternative is earning $3,000 on a safe asset (say, a Treasury bill), what should the manager do? Why?
A local restaurateur who had been running a profitable business for many years, recently purchased a three-way liquor license. This on-premise license gives the owner the legal right to sell beer, wine, and spirits in her restaurant. The cost of obtaining the three-way license was about $90,000, since only 300 such licenses are issued by the state. While the license is transferable, only $75,000 is refundable if the owner chooses not to use the license. After selling alcoholic beverages for about one year, the restaurateur came to the realization that she was losing dining customers and that her profitable restaurant was turning into a noisy, unprofitable bar. Subsequently, she spent about $8,000 placing advertisements in various newspapers and restaurant magazines across the state offering to sell the license for $80,000. After a long wait, she finally received one offer to purchase her license for $77,000. a) Would you recommend that she accept the $77,000 offer? b) The restaurateur…
Two partners start a business. Each has two possible strategies, spend full time or secretly take a second job and spend only part time on the business. Any profits that the business makes will be split equally between the two partners, regardless of whether they work full time or part time for the business. If a partner takes a second job, he will earn $20,000 from this job plus his share of profits from the business. If he spends full time on the business, his only source of income is his share of profits from this business. If both partners spend full time on the business, total profits will be $200,000. If one partner spends full time on the business and the other takes a second job, the business profits will be $80,000. If both partners take second job, the total business profits are $20,000. a) This game has no pure strategy Nash equilibria, but has a mixed strategy equilibrium. b) This game has two Nash equilibria, one in which each partner has an income of $100,000 and one in…
You are the manager of Taurus Technologies, and your sole competitor is Spyder Technologies. The two firms’ products are viewed as identical by most consumers. The relevant cost functions are C(Qi) = 2Qi, and the inverse market demand curve for this unique product is given by P = 410 −2 Q. Currently, you and your rival simultaneously (but independently) make production decisions, and the price you fetch for the product depends on the total amount produced by each firm. However, by making an unrecoverable fixed investment of $1,000, Taurus Technologies can bring its product to market before Spyder finalizes production plans. (Assume Taurus Technologies is the leader in this scenario.)What are your profits if you do not make the investment? $What are your profits if you do make the investment?Instructions: Do not include the investment of $1,000 as part of your profit calculation. $.
A risk-averse manager is considering a project that will cost £100. There is a 10 percent chance the project will generate revenues of £100, an 80 percent chance it will yield revenues of £50, and a 10 percent chance it will yield revenues of £500. Should the manager adopt the project? Explain. What will a risk-neutral and risk-loving manager do in the same situation?
Problem 13-21 Please answer the questions that are in Bold: #1. Expected profit and #3, the EVSI A real estate investor has the opportunity to purchase land currently zoned residential. If the county board approves a request to rezone the property as commercial within the next year, the investor will be able to lease the land to a large discount firm that wants to open a new store on the property. However, if the zoning change is not approved, the investor will have to sell the property at a loss. Profits (in thousands of dollars) are shown in the following payoff table: State of Nature Rezoning Approved Rezoning Not Approved Decision Alternative S1 S2 Purchase, d1 600 -200 Do not purchase, d2 0 0 If the probability that the rezoning will be approved is 0.5, what decision is recommended?Recommended decision = Purchase What is the expected profit?Expected profit = $ (fill in the blank) thousands. The investor can purchase an option to buy the land. Under the…