Economics Questions
INSTRUCTIONS:
1. Read questions carefully. Answer completely.
2. All three answers should be in one Word document.
3. Write your name at the top of the document.
4. Submit the document through Canvas.
(30 pts) 1. As the recently appointed general manager of the southeast region of Dunkin’ Donuts, you have been thinking a great deal about sales and expenses for your restaurants. This is particularly important to you, as a big part of your compensation is a bonus program, which would pay you 10 % of income.
a) Discuss the following concepts that relate to improving sales in your restaurants:
Marginal utility, including diminishing and negative marginal utility. (5 pts)
Total utility and sales to a customer. (4 pts)
Why you are thinking about having more promotional activities, such as buy one, get one free. (4 pts)
Customer delivered value. (4 pts)
b) Explain why you are considering being open 24 hours on Friday and Saturday. (4 pts)
c) Explain a variable cost and provide an example from Dunkin’ Donuts. (3 pts)
d) Explain a fixed cost and provide an example from Dunkin’ Donuts. (3 pts)
e) Explain how operating income for Dunkin’ Donuts is determined. (3 pts)
Dunkin’ Donuts’ restaurants serve hot and cold coffee, baked goods, and hard serve ice cream. The company also offers packaged coffee, Dunkin’ K-Cup pods, and ready-to-drink bottled iced coffee
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(30 pts) 2. You are getting ready to go shopping for holiday decorations at Target. Explain the following concepts in the context of shopping for the holiday decorations at Target*.
a) What would cause a change in the quantity demanded? What would cause a change in the demand for the holiday decorations? (8 pts)
b) Discuss the holiday decorations in the context of “inferior” good and “normal” good. (3 pts)
c) Discuss the holiday decorations in the context of “complementary” good and “substitute” good. (3 pts)
d) Discuss the holiday decorations in the context of the price elasticity of demand. (6 pts)
e) Discuss the holiday decorations in the context of market equilibrium. (5 pts)
f) Discuss the holiday decorations in the context of a change in supply. (5 pts)
*Target Corporation operates as a general merchandise retailer in the United States. The company offers beauty and household essentials; food assortments, including perishables, dry grocery, dairy, and frozen items; and apparel, accessories, home décor products, electronics, toys, seasonal offerings, and other merchandise. The company also provides in-store amenities, such as Target Café, Target Optical, Starbucks, and other food service offerings. It sells its products through its stores; and digital channels, including Target.com. As of September 19, 2019, the company operated approximately 1,800 stores. Target Corporation was founded in 1902 and is headquartered in Minneapolis, Minnesota.
(40 pts) 3. Identify and explain ten concepts discussed in this course that you believe would be important to a business owner/manager. (4 pts each)
1. Market Economy / Demand & Supply
2. Market Failure and role of government
3. Elasticity
4. Sales
5. Expenses
6. Monopolistic Competition
7. Economic Indicators
8. Oligopoly
9. Inflation
10. Monopoly
