EXPLORING ECON.-W/ACCESS (LL) >CUSTOM<
7th Edition
ISBN: 9781305757448
Author: Sexton
Publisher: CENGAGE C
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Chapter 11, Problem 3P
To determine
Evaluation of the business strategy of employing relatives instead of crew members to reduce costs.
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The salmon fishery on Vancouver Island has historically been one of the world’s richest. Over the past few years, poor returns of salmon to the island and competition from farm-raised salmon have reduced the profit realized by the fishermen. One response to lower revenues has been for fishermen to use family members instead of hiring crew “in order to reduce their costs.” What do you think about this business strategy? Will employing relatives really keep profits from falling? Under what conditions will this a good strategy?
Profit is the incentive that drives our market economy. Firms make production, pricing, and hiring decisions based on their quest for profit. But what happens when a firm discovers that it can make dramatically higher profits by stopping production altogether? In December 2000, due to wild swings in the market for electricity, Kaiser Aluminium faced just such a decision. Kaiser Aluminium had contracted with Bonneville power for all of its electricity needs and found itself in the unique position of being an electricity consumer and, potentially, an electricity reseller. By December 2000, Kaiser faced a difficult decision of continuing its current aluminium production and profit levels, or closing the plant to dramatically increase its profit by simply reselling its electricity. When making production decisions, firms must consider both their costs and revenues. One important concern for many firms is utility costs. In 1996, Kaiser Aluminium Corporation in Spokane, Washington, entered…
Suppose you have two types of users for your software: basic users and professionals. The value each group places on your basic program and your advanced program is given in the table below.
Value of Product
basic users Professionals
basic program $65 $60
advance program $75 $150
You don’t know who exactly your basic and professional users are. How might you price your advanced program so that only your professionals by that version and you maximize profits?
Group of answer choices
$144
$150
$65
$75
Chapter 11 Solutions
EXPLORING ECON.-W/ACCESS (LL) >CUSTOM<
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