Homework #2; Total 10 point if you complete all five questions. Q1, 2, 3, 4, 5 have each 2 points.

Your answer to the homework has to be more than five (5) sentences for each question based on researched facts and logical analysis to earn the full credit.

Q 1) (2 points)

Make a distinction of the price elasticity of demand, in terms of elastic, unitary and inelastic.

Price elasticity of demand describes the responsiveness of a good to a change in it’s price by percentage. In elastic demand, if price rise, then decrease in total revenue or if a price falls it increases total revenue. The quantity demanded percentage is greater than the percentage representing price change.

Q 2) (2 points)

Explain the law of diminishing marginal utility & the law of diminishing return in terms of definition and cause.

Q 3) (2 points)

Suppose a liquor store has to pay $1 of sales tax over a six-pack of Beer.

If the main customers of the liquor store are perfect price elastic, who pay $1 of sales tax between the liquor store and the main customers? why?

If the main customers of the liquor store are perfect price inelastic, who pay $1 of sales tax between the liquor store and the main customers? why?

Q 4) (2 points)

Describe the shape of AFC (average fixed cost), AVC(Average Variable cost), ATC(Average total cost) and MC(Marginal cost) Explain graphic relationship among ATC, AVC and MC.

Q 5) (2 points)

Is Accounting profit smaller than Economic profit? If yes, why? If not, why not? Define Accounting profit and economic profit.

PART 2

The most cost efficient company

Over the years, GE(General Electrics) was respected as one of the most admired company in America under the leadership by Mr. Jack Welch. One time Dell and Wal-mart tried to take over the prestigious status and got set back.

Fortune: America’s most Admired companies 2019(Top 10)

AppleLinks to an external site. Amazon.com Birshire Hathaway Disney Starbucks Links to an external site.

Microsoft Alphabet Netflix JPMorgan Chase FedEx

Q1)In your opinion, which corporation is the most cost efficient, best managed, and most admired company in America nowadays? GE, Proctor Gamble, Johnson & Johnson ,Dell ,Wal-mart or some other , lately Apple? why? (0.5 point)

In my opinion, I think Apple is the most admired companies not only in America but globally.

Q2) One time mighty companies such as IBM, or GM etc have been declining in their powerful status. What lesson can we learn from those cases?

Do you think the leadership of Mary Barra(GM CEO) with vision of focusing on electric car and self driving car can revive old glory of GM?(0.5 point)

Q3) Is the main reason of company failure due to leadership failure? Or Is it due to complacency problem, fear for change ,lack of hungry spirit, bureaucratic red tape, big is ugly, diseconomy scale or lack of micro management, a failure to adapt to changing technology? or you name it. (0.5 point)

Q4) what are your ideas to keep a world class company such as APPLE or etc. stay at top with continuous success in expanding market share, cost cutting efficiency or prosperous profits? possibly new creative leadership, thinking outside of box, without fear of change, maintaining a hungry spirit to be better? Give your own idea. (0.5 point)

Q5) which one company is the best one you wish to invest for next 3 decades, based on its management, product or business model, financial condition(with low debt), consistent past and potential earning? (0.5 point)