Task 1: DUE: WEDNESDAY
Reflection and Discussion Forum Week 6
Assigned Readings:
Chapter 16. Bargaining.
Chapter 17. Making Decisions with Uncertainty.
Chapter 18. Auctions.
Initial Postings: Read and reflect on the assigned readings for the week. Then post what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding in each assigned textbook chapter.Your initial post should be based upon the assigned reading for the week, so the textbook should be a source listed in your reference section and cited within the body of the text. Other sources are not required but feel free to use them if they aid in your discussion.
Also, provide a graduate-level response to each of the following questions:
a. American Airlines and British Airways are proposing to merge. If British pilots and American pilots are represented by different unions, how would this merger affect airline costs?
[Your post must be substantive and demonstrate insight gained from the course material. Postings must be in the student’s own words – do not provide quotes!]
[Your initial post should be at least 450+ words and in APA format (including Times New Roman with font size 12 and double spaced). Post the actual body of your paper in the discussion thread then attach a Word version of the paper for APA review]
Task 2:
Activity #6 DUE: Thursday
You are an economist for a U.S. Manufacturer, who is considering expanding sales into Europe. Your market research has identified the market potential in France, Italy, and Spain as described next:
Success Level France Italy Spain
Probability Units Probability Units Probability Units
Big 0.3 1,000,000 0.4 900,000 0.4 700,000
Mediocre 0.3 600,000 0.4 700,000 0.3 300,000
Failure 0.4 0 0.2 0 0.3 0
The product sells for $12 and has unit costs of $10. If you can enter only one market, and the cost of entering the market (regardless of which market you select) is $300,000, should you enter one of these markets? If so, which one? If you enter, what is your expected profit?
2. A reserve price is a minimum price set by the auctioneer. If no bidder is willing to pay the reserve price, the item is unsold at a profit of $0 for the auctioneer. If only one bidder values the item at or above the reserve price, that bidder pays the reserve price. An auctioneer faces two bidders, each with a value of either $30 or $80, with both values equally probable. What reserve price should the auctioneer set, and what is the expected revenue from auctioning the item with and without a reserve price? Consider the problem above, but now each bidder has a value of either $60 or $80. What reserve price should the auctioneer set, and what is the expected revenue from auctioning the item with and without a reserve price?
