Managerial Economics

5 Short Answers

And 3 pages essay

(1) The problem below is about risk taking. Based on your experience, respond to this problem.

One of the reasons Joseph Schumpeter argued that capital was doomed was because he predicted that big corporations would naturally shift away from risk-taking entrepreneurship in favor of low-risk managerial strategies. Has this happened? Have major corporations been unwilling to adapt to the times and meet competition head on? Are corporate executives better described at risk-averse managers than entrepreneurs willing to take a chance? (Paragraph answer only 8 lines)

(2) Which of these four scenarios are most important today? Which scenario is most conducive toward economic growth? Which scenario is the most normal historically? Your answer may include more than one scenario (2 pages body, references too = 3 pages.)

(3) Problem: Make a list of products and services, which are least satisfactory and have shown the least improvement over time. How many of these are produced by government? Do you agree or disagree with this statement by Milton Friedman: “Postal service, elementary and secondary schooling, railroad passenger transport would surely be high on the list. Ask yourself which products are most satisfactory and have improved the most. Household appliances, television and radio sets, hi-fi equipment, computers and, we would add, supermarkets and shopping centers would surely come high on that list.” (Paragraph answer only, 8 lines)

(4) The U. S. and the World economy is still in a period of slow growth and high unemployment. Since we in the U. S. are already in an election year, does the Political Business Cycle still exist? Do incumbent politicians use their power and influence to get reelected? Is this a “valid” use of political power? How does this impact business firms? (Paragraph answer only, 8 lines)

(5) Which protectionist measure causes the least damage economically, import quotas or tariffs (Paragraph answer only, 8 lines)

(6) Explain how the following two market-based incentives: Pollution fees and Marketable Permits provide a market-based solution to Pollution in the U.S. (paragraph answer only, 8 lines)