QUESTION 1

PURPOSE

The purpose of this assignment is to provide the student with the skills to discuss fundamental issues in production and cost theory and evaluate production and cost problems so as to increase firms' productivity and efficiency.

A)Explain the difference between a short run and long run production function. Give one example of this difference in a business situation.

B) What are the key points in a short run production function that delineate the three stages of production? Explain the relationship between the law of diminishing returns and the three stages of production.

C) Discuss the problems of measuring productivity in actual work situations. How might productivity be measured for each of the following industries?

i) Education (e.g., elementary and secondary education, higher education undergraduate and graduate)

ii) Government (e.g., the social security office, the internal revenue service)

iii) Manufacturing (e.g., soap and tooth paste, computers, heavy machinery)

iv) Finance and insurance (e.g., banks, insurance companies, brokerage houses)

QUESTION 2

PURPOSE

The purpose of this assignment is to provide the student with the skills to evaluate pricing strategies of firms in their effort to sustain competitive advantage in the marketplace.

REQUIREMENT

A) What is a natural monopoly? What are some examples? What role does government often play in natural monopolies?

B) The standard models of monopoly and perfect competition still are useful when applied to real-world industries which are neither monopolistic nor perfectly competitive?