1). The market demand function for a good is given by Q = D(p) = 800 ? 50p. For each firm that produces the good the total cost function is TC(Q) = 4Q+( Q2/2) . Recall that this means that the marginal cost is MC(Q) = 4 + Q. Assume that firms are price takers.

(a) What is the efficient scale of production and the minimum of average cost for each firm?

Hint: Graph the average cost curve first.

(b) What is the supply function of each firm?

(c) If there are currently 100 firms producing the good, what is the market supply function? What is the short-run competitive equilibrium in this market with 100 firms? What is the profit of each firm?

(d) What is the long-run competitive equilibrium price and quantity in this market?

2). Consider the market of the previous question in the short run (with 100 firms), and assume that the government imposes a tax of $3 per unit.

(a) What would be the new equilibrium quantity supplied after the tax is imposed?

(b) What would be the price consumers pay and the price sellers receive with the tax? Explain how the burden of the tax is shared between consumers and producers.

(c) Compute consumer and producer surplus before and after the tax. How much government revenue is generated by the tax? How large is the deadweight loss?

(d) What would be the long-run equilibrium quantity in this market with the tax? What are the prices that consumers pay and sellers receive? Compare this to the long-run equilibrium without the tax and determine how much of the burden of the tax is borne by consumers and producers.

Task.

You have been hired as a Management trainee assisting the Head of Strategy for a multinational Company. Your immediate boss has requested you to brief him on your understanding of the Strategic Management process. In his request to you, he admitted that, there are a number of approaches but he indicated his preference for the one adopted by Pearce and Robinson. You are therefore required to answer the following questions in an attempt to explain the strategic management process;

In one of the definitions used by Pearce and Robinson, Strategic management was described as the "art and science of formulating, implementing and evaluating cross- functional decisions aimed at achieving organizational goals"; Briefly discuss the context in which strategic management could be described as 'an art' and when it also could be described as 'a science'. (4 marks)

Describe the strategy formulation process; clearly explaining three major activities that are undertaken at this stage? (3 marks)

Distinguish between business level strategies and corporate level strategies. (3 marks) Total = (10 marks)

Question Two

Organizations formulate and implement policies and strategies that are shaped by the forces within the external and internal business environment. University of Professional Studies, Accra (UPSA) is one organization that has initiated a number of policies over that past decade. This include the establishment of the Centre for International Education and Collaboration (CIEC), the Law faculty, development of MPhil programmes in Finance and Marketing, development of Open Distant learning programs among others.

You are required to analyse how the following factors/forces within the remote external environment could have influenced these policies that were formulated and implemented by UPSA.

a) The Political environment

b) TheEconomicenvironment

c) The Socio-economic environment

d) TheTechnologyenvironment

e) The legal/regulatory environment

Question Three

(10 marks)

There are a number of techniques employed to conduct an analysis of strategic options from which an organization can choose from to aid its attainment of long term objectives. As staff of

Lecturer - Kwame Fosu - Boateng

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UT Holdings, co-opted into a business development committee, you have been tasked to do the following;

What is the Boston Consulting Group's Growth-Share-Matrix (BCG-GSM)

Present a well labelled graphical illustration of this model (Boston Box)

Explain each of the four quadrants in this matrix with appropriate strategies that may

work out for each quadrant. (10 marks)

Question Four

The industry environment plays a critical role in the profitability of a company. Hence, companies are to critically examine an industry towards ascertaining how its strategies success could be influenced by the industry factors. With the aid of a diagram, conduct an industry analysis of the carbonated drink industry assuming you are the business strategist working for NESTLE Milo Ghana Limited.

Question Five:

(a) A strategist has two broad approaches from which he/she can approach the development of strategies through the strategic management approach. Discuss the fundamental differences and similarities between "outside-in" and "inside-out" thinking about strategic management, and their influence on strategy. (4 marks)

(b) In examining the competitive dynamics within an industry, we discussed the need to first ascertain "the extent to which a company is a strong competitor" and the three (3) drivers of competitive behaviour. You are required to explain the two elements or basis used to determine the extent of competition from another company in the same industry and further explain the three (3) drivers of competitive behaviour. (6 marks)

Total = 10 marks

Question Six:

Understanding the common vocabulary used in strategic management is important to the application of its concepts.

Required:

There are four general steps in conducting an external environmental analysis starting with scanning of the environment. Briefly, explain all four steps. (2.5 marks)

Choose any organisation of your choice and employ the "SWOT Matrix" to demonstrate the current strategic position of the organization and clearly indicate the strategy options available to help match that organization's internal environmental elements against its external environmental elements. (5 marks)

Compare and contrast "strategic blunder" and "strategic drift"? (2.5 marks) Total = 20 marks

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Question Seven:

There are so many avenues through which the concepts of strategic management could be applied in real life.

Required:

With reference to the business model canvas (as discussed in class), illustrate how the nine (9) elements interact in ascertaining how a business can sustainably generate revenues. (3 marks)

Using an organization of your choice, practically demonstrate your understanding of the

organization's business model.

(7 marks)

Task.

4. Assume that a firm's short run cost function is C(q) =100q-4q' +0.2q' +450. What is the firm's short run supply curve?? If price is p=115, how much output does the firm supply? 5. Each firm in a competitive market has a cost function of C(q) = q-q' + q . There are an unlimited number of potential firms in this market. The market demand function is given by Q=24- p . Determine the long run equilibrium price, quantity per firm, market quantity and number of firms. How do these values change is a tax of $1 per unit is collected from each firm? 6. Assume that the inverse demand function for cheese is Q=100-10p and the supply curve is Q=10p. a. [Easy] What are the effects of a specific tax of $1 per unit on the equilibrium quantity and price, government tax revenue, consumer surplus, producer surplus, welfare and DWL? b. [Harder] What are the effects of a specific subsidy (negative specific tax) of $1 per unit on the equilibrium quantity and price, government tax revenue, consumer surplus, producer surplus, welfare and DWL? c. [Hard] The government, instead of a tax or subsidy, imposes a price support (minimum price) of $6. The way this is implemented is via a deficiency payment. This means the government will guarantee producers a price of $6 and the producers choose their output accordingly. They then sell that output to consumers at whatever price consumers are willing to pay for that total output (not $6!!!). The government pays producers the difference between the $6 dollars and the price consumers are willing to pay for all units produced. This payment is called the deficiency payment. What is the quantity supplied, the price that clears the market and the deficiency payment? What effect does this program have on consumer surplus, producer surplus, welfare and deadweight loss? d. [Medium hard] Now instead of any of the policies above, the government imposes a price ceiling of $3. That is it. Price is not allowed to rise above $3. How does equilibrium change (price and quantity)? What effect does this price ceiling have on consumer surplus, producer surplus and deadweight loss