BUS 650, THE ECONOMIC ENVIRONMENT. Final paper - 62071

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Directions: Include a copy of the question with each of your answers. For the problem-solving questions, show your work, to receive partial credit. As a guideline, answer each essay question within 10-30 typed lines. If you use one or more sources of information in preparing any answer, provide an APA-style reference, and cite a reference wherever it is used. Submit your answers using the Assignment Feature by Wednesday in Seminar Six. If you have problems with the Assignment Feature, you can attach your answers to an email message to the instructor. Each question is equally-weighted, and counts 10% of your exam grade. The exam is 20% of your course grade.


1. Problem-solving question: Use the following data for a pure monopoly to calculate the firm’s: (a) total revenue, marginal revenue, marginal costs, and average total cost; (b) its profit-maximizing output level and produce price; (c) its profit. (d) Use the price-cost formula to determine whether or not the firm’s operations are productively-efficient. (e) Use the price-cost formula to determine whether or not the firm’s operations are allocatively efficient.


Q (P = AR) TR MR TC MC ATC

0 $120 $100
1 119 200
2 118 280
3 117 340
4 116 380
5 115 400
6 114 460
7 113 560
8 112 665 



2. (a) Identify three types of competition that most firms encounter other than competition from other firms in their industry in their home country. (b) Is it good for the economy to have more competitive markets? Explain. (c) If government industry regulators underestimate the degree of competition in an industry are they likely to over-regulate the industry? Explain.

3. (a) Economically, when is it best for a firm to outsource or contract-out some part of its production? (b) Provide an example of a business task or operation that it would make sense to outsource.
(c) Provide an example of a government task that it would be economically efficient to contract-out. (d) Is there any risk to outsourcing? Explain. (e) For a task that is already outsourced, could it make sense to bring it back in-house at some future time? Explain.

4. (a) Identify two market structures in which product development and product differentiation is an important type of competition for firms operating in those market conditions. (b) Provide examples of three types of product differentiation that could help make a firm in a particular industry more competitive. 

5. (a) Would a minimum-wage law help entry-level workers in some market structure; while hurting them in another market structure? Explain. (b) Would a labor union help workers in some market structure; while hurting them in another market structure? Explain.

6. (a) Identify and describe four causes (i.e., types of unemployment). (b) Are some workers more likely than others to be laid off and have a harder time finding another satisfactory job? Explain. 

7. (a) Identify three economic variables that create differences in market interest rates on assets and/or liabilities. (b) For most companies, are business loan interest rates lower than the interest rates on personal loans for most U.S. households. Explain (c) Is the interest rate paid by the U.S. government on its short-term Treasury bills (T-bills) usually less than a comparable commercial paper loan to most corporations in the U.S.? Explain. 

8. (a) Recommend some U.S. fiscal policy change in business taxes or government spending that would reduce the U.S. government’s budget deficit and also help improve the U.S. economy? Explain. (b) Would reducing the federal budget deficit also reduce the national debt? Explain. (c) What’s wrong with raising taxes in a recession? 

9. (a) State two economic principles of taxation. (b) Which principle best justifies the excise tax on gasoline, when the tax revenue is used to maintain or improve the roads? Explain. (c) Which principle best justifies the progressive U.S. taxation of corporate profits? Explain. 

10. (a) Define the inflation rate. (b) Explain how the CPI differs from the PPI, as a measure of the U.S. inflation rate. (c) Why is inflation risk a business management risk? (d) Which would be better, for the U.S. economy, a low stable inflation rate or deflation? Explain. (e) What U.S. government organization is primarily responsible for controlling the U.S. inflation rate, while helping to reduce cyclical unemployment and increase the U.S. economic growth rate?

Solution Description

Directions: Include a copy of the question with each of your answers. For the problem-solving questions, show your work, to receive partial credit. As a guideline, answer each essay question within 10-30 typed lines. If you use one or more sources of information in preparing any answer, provide an APA-style reference, and cite a reference wherever it is used. Submit your answers using the Assignment Feature by Wednesday in Seminar Six. If you have problems with the Assignment Feature, you can attach your answers to an email message to the instructor. Each question is equally-weighted, and counts 10% of your exam grade. The exam is 20% of your course grade.


1. Problem-solving question: Use the following data for a pure monopoly to calculate the firm’s: (a) total revenue, marginal revenue, marginal costs, and average total cost; (b) its profit-maximizing output level and produce price; (c) its profit. (d) Use the price-cost formula to determine whether or not the firm’s operations are productively-efficient. (e) Use the price-cost formula to determine whether or not the firm’s operations are allocatively efficient.


Q (P = AR) TR MR TC MC ATC

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BUS 650 Final Exam.doc
BUS 650 Final E...