Course Name: MBA 5125 Economic Decision Making Managers

Scenario One:

After experiencing a few years of some modest success, your company (Indiana, Inc.) wants to expand operations, but it needs to borrow a considerable sum of money from its commercial bank.

1. The Federal Reserve has decided to sell treasury bonds on a regular basis over the next few weeks. Identify by name and describe in detail the specific tool that is being used by the Federal Reserve, and then based on what it is doing, brief whether you would recommend borrowing at this time or waiting until later, and why.

2. The Federal Reserve has just advised the commercial banks that it must increase the percentage of the money it keeps in its vaults from 10% of all deposits to 12% of all deposits over the next few weeks. Identify by name and describe in detail the specific tool that is being used by the Federal Reserve, and then based on what it is doing, brief whether you would recommend borrowing at this time or waiting until later, and why.

3. The Federal Reserve has just lowered the interest rate that it charges commercial banks that seek to borrow money directly from the Federal Reserve from 5% to 4%, and this will remain in effect over the next few weeks. Identify by name and describe in detail the specific tool that is being used by the Federal Reserve, and then based on what it is doing, brief whether you would recommend borrowing at this time or waiting until later, and brief why.

Scenario Two: Assume you have recently been hired as the new manager of EyeTech Company. 1. Brief in detail the meaning of First Degree Price Discrimination, Second Degree Price Discrimination, and Third Degree Price Discrimination.

2. Assume that each degree of price discrimination can be successfully implemented by EyeTech Company. Select the degree of price discrimination that you believe will be the most successful in improving sales and brief why. (Note that you can only select one specific degree. Do not select more than one degree or a combination of degrees.)

3. To also gain more insights into EyeTech's primary consumers and their demand for EyeTech's products, you have decided to use one of the four strategic tools for managers highlighted to better understand consumer demand. Identify and describe the tool (one only) you believe would provide the best insights into EyeTech's primary consumers and brief why you believe this particular tool would be the best one to use.

Scenario Three:

Bilbo Company wants to expand operations into one foreign country. As the company manager, you have been directed to explore both the economic conditions and economic freedom conditions of four foreign countries, and then make a recommendation based on the data you obtain on the countries from the Index of Economic Freedom that can be accessed at https://www.heritage.org/index/ Do not use any other data source.

The countries under consideration are the following:

1. Chile: 2. Poland: 3. Qatar: 4. Philippines:

For each country above, make a small chart that reports the following statistics provided in the index: A. GDP, B. GDP Per Capita, C. Unemployment, D. Inflation, and E. Population.

Then for each country above, make a small chart that reports the following economic freedom scores: A. Property Rights, B. Government Integrity, C. Business Freedom, D. Tax Burden, and E. Trade Freedom. After you collect and report all of the required statistics and economic freedom scores for each country, recommend one country (only one) among the four that you believe would be the best one for Bilbo Company to expand into, and explain why. Be sure to base your recommendation on all of the data you collect for each country in order to make a more complete comparison and don't base your recommendation on only one or a few of the statistics and/or scores.

Scenario Four:

Macrohard Aluminum, Inc. wants to increase its overall size in the hopes of gaining greater market shares of the various products it sells.

1. Describe in detail the meaning of economies of scale.

2. Identify 4 specific ways that the company might be able to achieve economies of scale from increasing its size, and describe each one separately.

3. Describe in detail the meaning of diseconomies of scale, and explain 2 specific ways how increasing the size of Macrohard Aluminum, Inc. could unintentionally result in some diseconomies of scale. __________ And also:

1. Does the Balance of Trade always balance? Briefly explain why or why not.

2. Based on the economic meaning of supply and the economic meaning of demand, explain whether supply creates demand or demand creates supply.