Business Economics

PART A (40 points in total)

Answer ALL of the following Questions. Please choose ONE (and only one) available answer for each one of them. Choosing more than one option is treated as a wrong answer. List your chosen option in your answer booklet(s).

 

  1. Pulsar Plc is considering of exporting its products to the Swedish market. It expects to earn an annual accounting profit of £200m from doing so. It has also the option to begin exporting to India, Brasil or South Africa, but it has the production capacity for only one of the four possible markets (including Sweden). The expected annual accounting profit for the above three markets is £250m, £200m, and £150m respectively. On the basis of this information, the economic profit of exporting to Sweden is equal to:
    1. -£50m.
    2. £0m.
    3. £50m.
    4. £200m.

 

 

  1. If the marginal cost is above the average cost at a certain level of production and the firm decides to increase output, then:
    1. The average cost will increase but the marginal cost will decrease.
    2. Both the average and the marginal cost will increase.
    3. The average cost will increase but the average cost will decrease.
    4. Both the average and the marginal cost will decrease.

 

 

 

 

  1. Which one of the following conditions you would least expect in a supply-driven market?
    1. Highly standardized products.
    2. Massive market size.
    3. Big corporate customers.
    4. Fast technological change.

 

 

  1. Samsung sells its 16in monitors to Apple for £85 per screen. Its estimated cost is £49 and Apple is willing to pay up to £99. The value creation (VC) and consumer surplus (CS) in this case are equal to:
    1. VC=£50 , CS=£14.
    2. Impossible to say.
    3. VC=£36 , CS=£14.
    4. VC=£99 , CS=£36.

 

 

  1. Which one of the following is not an element of the five forces framework? a. Internal rivalry.
    1. Supplier power.

 

 

 

 

 

 

 

  1. The market for social-media-monitoring software exhibits very strong network externalities: The firm with the highest market share doubles its market share every year. It took Rogue Inc 20 years to obtain 100% market share and become a monopoly. How may years did it take for Rogue Inc to obtain 25% market share?

 

 

  1. In order to increase the creativity of its staff, Google invested in a highly unique headquarters building, brimming with indoor leisure activities and places for staff to socialize. What type of asset-specific investment is this?
    1. Site-specific investment.
    2. All other options are correct.
    3. Physical asset investment.
    4. Human asset investment.

 

 

  1. The two most important types of innovation risk for businesses are:
    1. Funding risk and fire risk.
    2. Regulation risk and insurance risk.
    3. Project-completion risk and methodology-correlation risk.
    4. Ethical risk and supply-chain risk.

 

 

 

PART B (30 points in total)

 

  1. —”‘„‘”‘•ǯ–‘–ƒŽ…‘•–ȋȌƒ•ƒˆ—…–‹‘‘ˆ‹–•’”‘†—…–‹‘Ž‡˜‡Ž“‹•‰‹˜‡„›–Š‡‡“—ƒ–‹‘ below:

 

 

  1. How much is the fixed cost of production for Ouroboros? (5 points)

 

  1. If q=5,000, how much is the total cost for Ouroboros? (5 points)

 

  1. Evaluate the marginal cost for Ouroboros when q=3,000. (5 points)

 

  1. For this part, suppose that Ouroboros has two corporate customers. The first

…‘”’‘”ƒ–‹‘•ǯ demand as a function of —”‘„‘”‘•ǯ’”‹…‡‹•‰‹˜‡„›ܦሺ݌ሻ ൌ ͳͲǡͲͲͲ െ ݌ and the second corporationǯ•†‡ƒ†ˆ—…–‹‘‹•‰‹˜‡„›  ܦሺ݌ሻ ൌ ʹͲǡͲͲͲ െ ݌.

ƒŽ…—Žƒ–‡—”‘„‘”‘•ǯ maximum possible profit level.                                 (15 points)

 

 

 

 

 

 

 

 

 

 

 

  1. HealthLife and Voltality are competing in a patent race for a new generation of anti-ageing products. Each one of them needs to pick one of two research approaches. The first approach (X1), is fully deterministic and it will take 10 years to complete. The second one, (X2) is probabilistic and it has a probability of 60% to complete in 5 years and a probability of 40% to complete in 20 years. X2 is statistically independent, i.e. if both companies select it, then the outcome for one company is independent of the outcome for the other. Moreover, if one company achieves the innovation before the other then it will enjoy the advantage of being a monopolist for some period of time and it will generate expected profit of £40bn. The other company gets nothing in this case. Finally, if the two companies complete the innovation at the same time, they will have to share the market and, due to price competition, each one will generate expected profit of £18bn.

 

  1. Suppose that HealthLife select X1. Assuming that both companies are risk-neutral, i.e. they evaluate their options on the basis of expected profits, which approach does

Voltality prefer to take?                                                                                                    (5 points)

 

  1. Find what is the likely outcome of its patent race in terms of selected approaches from

the two companies.                                                                                                            (10 points)

 

  1. Suppose that the two companies also compete in a different patent race, which is fully probabilistic and there is only one available methodology. HealthLife invests ௅ி and Voltality invests ܫ amount of money in the race. The winner gets a market worth of £100 bn and the loser gets nothing. The probability that each company has to win the patent race depends on the investment of both companies and it is given by:

 

 

 

Find how much the two companies will invest in this patent race, their chances of winning it, and their expected profit from participating in this patent race.                         (15 points)

 

  

PART C (30 points in total)

 

  1. With the use of an example, briefly explain the main difference between the ex-ante and the ex-post opportunity cost of capital. Why does this matter for the evaluation of an

investment decision?                                                                                                          (15 points)

 

  1. In what ways can managers utilise the distinction between ex-ante and ex-post

‘’’‘”–—‹–›…‘•–‘ˆ…ƒ’‹–ƒŽ™Š‡†‡…‹†‹‰‘–Š‡ˆ‹”ǯ••–”ƒ–‡‰›?                      (15 points)

 

  1. Briefly describe the managerial support framework for vertical integration and

explain its usefulness for managerial decisions.                                                       (15 points)

 

  1. How can it assist managers in setting-up and sustaining their strategic positioning?

(15 points)

 

 

 

END OF PAPER

 

Get 20% Discount on This Paper
Pages (550 words)
Approximate price: -

Try it now!

Get 20% Discount on This Paper

We'll send you the first draft for approval by at
Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

Assignment Help has assembled a team of highly skilled writers with diverse experience in the online writing circles. Our aim is to become a one stop shop for all your Academic/ online writing. Check out below our amazing service!

Essays

Essay Writing Services

At Assignment Help, we prioritize on all aspects that creates a good grade such as impeccable grammar, proper structure, zero-plagiarism, and conformance to guidelines. The principal purpose of essay writing is to present the author's evaluation concerning a singular subject about which they have made. Since Professionalism is the mother of every success, try our team of experienced writers in helping you complete your essays and other assignments.

Admissions

Admission Papers

You have been trying to join that prestigious institution you long yearned for, but the hurdle of an admission essay has become a stumbling block. We have your back, with our proven team that has gained invaluable experience over time, your chance of joining that institution is now! Just let us work on that essay.How do you write an admission essay? How do you begin the essay? For answers, try Quality Custom Writers Now!

Editing

Editing and Proofreading

Regardless of whether you're pleased with your composing abilities, it's never an impractical notion to have a second eye go through your work. The best editing services leaves no mistake untouched. We recognize the stuff needed to polish up a writing; as a component of our editing and proofreading, we'll change and refine your write up to guarantee it's amazing, and blunder free. Our group of expert editors will examine your work, giving an impeccable touch of English while ensuring your punctuation and sentence structures are top-notch.

Coursework

Technical papers

We pride ourselves in having a team of clinical writers. The stringent and rigorous vetting process ensures that only the best persons for job. We hire qualified PhD and MA writers only. We equally offer our team of writers bonuses and incentives to motivate their working spirit in terms of delivering original, unique, and informative content. They are our resources drawn from diverse fields. Therefore your technical paper is in the right hands. Every paper is assessed and only the writers with the technical know-how in that field get to work on it.

Coursework

College Essay Writing

If all along you have been looking for a trustworthy college essay service provider that provides superb academic papers at reasonable prices, then be glad that you search has ended with us. We are your best choice! Get high-quality college essay writing from our magnificent team of knowledgeable and dedicated writers right now!

Coursework

Quality Assignment/Homework Help

We give the students premium quality assignments, without alarming them with plagiarism and referencing issues. We ensure that the assignments stick to the rules given by the tutors. We are specific about the deadlines you give us. We assure you that you will get your papers well in advance, knowing that you will review and return it if there are any changes, which should be incorporated.