Instructions
Largo Global Inc. is a fictious firm that is will be used to allow you to understand the market forces of supply and demand as they impact a company as well as the industry in which the company operates. The company produces several different product lines two of which are a simple Standard box and a more elaborate Deluxe box. These boxes are also produced by many other companies.
In Project 2, you will learn about how to apply the tenets of microeconomics to improve the company’s profitability. In tab 1 after reading the instructions, you will chart the supply and demand curves for the two different boxes. In tab 2 you will focus on the price elasticity of demand for these two products. In tab 3 you will approximate the prices that maximize the profit for both boxes.
Project 2 is the team assignment in MBA 620. Follow these steps to complete the project:
1. In step 3 the team will complete their Team Agreement and Work Plan and submit it to their faculty member by the due date noted by their faculty member.
1. In step 4, the team will complete this Excel file by answering the questions for all three tabs in the boxes provided. One member of the team will submit this file to the Project 2 Milestone assignment folder by the stated due date to receive feedback from their faculty member. Upon receipt of the feedback, the team will coordinate any necessary corrections.
2. In step 5, each team member must answer all questions for two of the five topics provided in the Word file. These questions constitute the core of your team’s report. Each team member will serve as the team’s primary respondent for one of the five topics and coordinate the answers for that topic. Each team member will also serve as the secondary respondent to one of the five topics and submit their answers to the primary respondent.
a. The faculty member will create a separate Team Project 2 Discussion forum for each team which includes all five topics. All team members should prepare their answers to the questions for their two chosen topics as separate Word files. They should post their two files in the appropriate topics in the Team Project 2 Discussion forum.
b. After coordinating with the other members of the team, the primary respondent for each topic will submit their answers to the editor of the team’s Word file. The editor will then consolidate the answers to the questions for all five topics in a single Word file and submit that file along with the team’s revised Excel file to the Project 2 Final assignment folder.
c. If the team does not receive a grade of Meets Requirements or Exceeds Requirements, the primary respondents will coordinate any necessary changes to the answers for their topic questions and resubmit them to the editor. The editor will then consolidate all changes to the Word file and resubmit the file along with the team’s Excel file to the Project 2 Final assignment folder.
Title Page
Name
Course and section number
Faculty name
Submission date
First Revision Changes (if necessary)
Second Revision Changes (if necessary)
Supply and Demand
- Explain why an understanding of the law of demand and the law of supply is important to being an effective manager.
- Identify the supply factors that are most important in determining the market equilibrium for the Deluxe box.
- Identify the demand factors that are most important in determining the market equilibrium for the Standard box.
Market Structure
- Explain why an understanding the market structure in a which company operates is important to being an effective manager.
- Explain the market structure that is most likely operating in the market for the Deluxe boxes.
- Explain the market structure that is most likely operating in the market for the Standard boxes.
Price Elasticity
- Discuss what actions the company should take in setting the price of the Standard box given its price elasticity of demand.
- Discuss what actions the company should take in setting the price of the Deluxe box given its price elasticity of demand.
- Assuming the price elasticity of supply for the Standard box is inelastic, explain the key factors that the company must consider in expanding production.
Profit Maximization
- Explain under what conditions profit maximization would be appropriate for the Standard box.
- Explain why the concepts of marginal revenue, marginal cost and economies of scale are important to the financial objective of maximizing profit.
- Assuming the company only manufactures these two product lines and they have customers who purchase both products from them, discuss what the overall company financial objective should be.
Economics and Decision Making
- Explain how an understanding of economics is important to being an effective manager.
- Explain why understanding the economic concept of opportunity cost is essential to managers making better decisions.
- Explain why understanding the economic concepts of marginal revenue and marginal cost are essential to managers making better decisions.
