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Case Study: Nordic Trac Company – an economic dimension (60) pts
Nordic Track Company manufactures treadmills and sells them under conditions of monopolistic competition. An economic consultant which the firm hired estimated its demand function as P = 2575 – 5Q, where P is in dollars and Q is in number of Treadmills sold per week. The company believes its weekly expenses vary with output according to the equation
TC = 25,000 + 25Q – 5Q2 + 1/3 Q3.
Based on these equations and using concepts from Chapters 4 (Elasticity), 7 (Costs), 8 (Perfect Competition) and 9(Monopolistic) and using the Power Rule video from Chapter 6 (Production):
a. Determine the firm’s short-run profit-maximizing price and output rate. SHOW ALL DETAILED WORK TO RECEIVE CREDIT
b. How much profit will the firm earn at this price and output rate? SHOW ALL DETAILED WORK TO RECEIVE CREDIT
c. Due to supply chains problem associated with the Israel-Palestinian conflict in the Red Sea, Nordic Trac total fixed costs rise by 20%. Calculate the impact upon the firm’s price, output and profits. Explain these results using concepts from Chapters 7 and 8.
d. Due to a lack of skilled employees, Nordic Trac offers a 20% increase in wages to attract new workers? Which specific costs will this impact and why? Will it change the output level? Why? Using concepts from Chapters 8 & 9, in this changed environment, what specific analysis will Nordic Trac need to evaluate before making production decisions in future?
e. What impact did Covid likely had on sales of Nordic Trac and the subsequent impacts for Gyms such as Planet Fitness, Anytime Fitness, Curves, etc? Why? What incentives can these businesses adopt to increase their membership? Using scholarly resources, give some specific workable example. Which economic methodology will you use to evaluate various options?
II. National Elections – Economic Implications (40 points)
As y’all know 2024 is an election year. Besides foreign and social policies, domestic economic policies are also likely to be impacted depending on who occupies the White House next year. Using scholarly and credible sources, compare and contrast the policies which are likely to be adopted / continued if Joe Biden wins or if Donald Trump does. Based on their (both Biden and Trump) record, evaluate the following specific policies which each candidate have an impact on the business world:
a) Capital-Gains Tax
b) Investment Tax Credit and other policies impacting investment in the private sector
c) Developing technical and scientific skills to meet the challenges of the future business environment
d) Trade policies with specific reference to our major trading partners such as China and Mexico.
As this is a Managerial Economics, please include responses with respect to economic impacts, income-distribution, economic growth, budget priorities and constraints. For sources, please refrain from partisan bashing of one candidate or other and for sure avoid well-known proven left-wing or right-wing Think-tanks (examples, such as Cato Institute, Heritage Foundation, Politico or Democracy Watch as well as left-wing (CNN, NY Times or Fox, Right-Wing News, etc). Please conclude with your own opinions and support your responses based on economic theory, logic or scholarly references. All the best. Upload your paper in Turnitin before the deadline. All the best.
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