Economics for Managers

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Economics for Managers

Answer 1.

Pigovian Taxes are described as administration generated charges. These are laid upon business associations when they generate outputs through producing something that causes a derogatory or disturbing effect to a third party (, 2015). These are unique to Negative externalities which can be viewed as contaminating the earth or incurring a generous amount of social expense. Through the duty of Pigovian charges, the administration lessens the impacts of negative externalities productively (Sarre, 2015). The negative externalities lead to a host of items that surpass the decent qualities, against the general public’s interest leading to a higher social expense; where social expense surpasses the Privet expense. Now how the Pigovian charges cover the negative externalities is by pulling down the generation volume to an extent bringing about deadweight misfortune. The concept of deadweight reduction alludes to the implications of these Pigovian taxes which make a cut on the surplus that could be produced by these businesses which now are burdened with Pigovian taxes. An example of such tax is a tax levied on smoking, in the way of Cigarette packets (Sarre, 2015). This puts dead weight on the cigarette manufacturers.

Research Proposal – Factors Affecting Profitability in Retail Sector Australia

Economics for Managers

A creation unit of Cigarettes results in a distinguishable amount of pollution. Now our responsibility is to balance this damage on Mother Earth by making the production and the access to these products a little more expensive, as we cannot dictate someone to not such products. So, this is an indirect pull on such businesses and their consumers. This pull of the privet expense of the product will be equivalent to the minimal privet benefit of the business. It is seen that the social expense is negligible surpasses when compared to the Privet cost in the event of negative externalities (, 2015). The outline exhibited above has anticipated in a graphical manner, the minimal Privet cost and the minor. It is also found that the business sector amount incurred on this basis surpasses the otherwise ideal amount leading to accruing negative externality. Delivering merchandise at this increased amount by the business sector in place of the ideal amount has led to the deadweight reduction which has been anticipated as a triangle shape between the interest and minor social expense bend in figure (Sarre, 2015).

Answer 2.

This ‘privatization mix’ is law enforcement by ‘state as facilitator’ for business regulations that keep them in harmony with the social and environmental aspects. Economically, this decentralization would involve the relocation and conferring of authority, to some non-state-owned personnel to many levels of government. Multilateralization thus will involve both, the redesign of criminal justice by private authorities. It will lead to decentralization of security as per local needs and will benefit from local knowledge (Chang, n.d.). The types of open reimbursement being granted to a wide populace is expansive in nature thereby favouring persons who are able to spend for such services. As the real subsidizing will be channelized from private division there may be issues identifying with the adherence of thorough standards of police administration, making it more prejudiced for certain sections of public decreasing social balance. Then again procurement of police personnel will be influenced thereby leading to undeserving people low on police values taking the charge. Concluding from the quantum of offences limited by the Police and their effects is seen on the Courts, regulatory structure, border protection and other infrastructural improvements we see that Privatization of police administrations will certainly debilitate the strict way of the administrations.

Economics for Managers

Answer 3.

In order to understand restraining infrastructure business with a goal to expand its benefits, it is imperative to know what Minor expenses and income are.  Minor expense is viewed as the extra cost acquired for making an additional unit of the venture, while negligible income is alluded to as the additional unit of income created by the sympathy toward making the speculation. The most extreme level of income for an imposing business model would be the level where the minimal income is 0. A syndication business can upgrade its income just when it can offer more items at a lower cost and when the minor income is equivalent to zero. The interest of such items may be such that the increments are balanced by a fall in the costs. Thus, an imposing business model is obliged to bring down its costs to build its income. The deadweight reduction is created by a limiting income, so as to restrain the infrastructure of the business, its cost more particularly, than the peripheral expense of the firm (Chang, n.d.).  Working along these lines the decreasing of the interest for the commodities in the business sector compels the customers to make lesser buys. At the point when the ascent in costs meets the interest bend, a crimp in the interest bend is made. The same has been given aided by a chart. A syndication firm can consider the system of value segregation keeping in mind the end goal to upgrade its surplus profit. The idea of value separation can be viewed as an approach to charge diverse costs from distinctive customers and from the diverse amount of items sold. The cost can be set to a more elevated amount and this will empower the association to gain the most extreme benefits from its purchasers.

HI6027 Business And Corporations Law

Economics for Managers

Answer 4.

Wages for any business cover a considerable segment of working expenses and consequently play a key determinant of business reasonability. So is also the case in hospitality in Australia as they are particularly basic for the hospitality industry.  In light of this fact, we see that a pay cut would create serious implications. It would impel rage among it can be inferred that only in cases wherein the action of a typical matter surpasses the sensible necessity for the same, the specialists ought to and will only be satisfied, if the end goal to usher more benefits for the association is worth more than the pains caused by the cuts (Chung, 2006).

If the wage in way of incentives is increased the employee is more satisfied and vice versa which affects business. At times the management may deem it important to cut down these expenses. This is only feasible if there are two outcomes of this cut. First, the proficiency wages paid to the representatives should help in lessening the rate of business turnover and second, it should help in expanding the workforce. When we come to the Hotel segment, the interest for staff is curbed by the diminished wages (Chung, 2006). Subsequently, the interest bend for workers ascends. The lessening in the wages would bring about diminishing of genuine expenses. The end results demonstrate the way of a decrease in the genuine pay impacts, lesser variety and interest in service, thus making the company evaluate its decision. If there should be an occurrence of a genuine decrease in wage, the peripheral expense of one extra component of yield diminishes and subsequently, an association would select to build up of yields. In the event that there has to be a lessening in the genuine wages, then the peripheral costs would likewise decrease and in this manner the association would diminish the costs and build yields along these lines, raising business profits.

Economics for Managers
Answer 5.

The three business sector structures peculiar to each economy, are imposing business model, flawless rivalry and oligopoly structure. This structure determines a particular company’s pattern and its relative position (Borjas, 2003). An imposing business model extends the predominance of a solitary unit that is dominating the sector and it can change the costs according to its own prerequisites. The king of the sector makes it troublesome for the development of a rival company. The second is the flawlessly focused business sector; a business sector structure comprising of a few firms who are just as equipped and here the clients have various choices that make every firm a value taker. This structure makes it less demanding for new firms to enter or exit the business sector. As we come to the oligopoly model in the business sector, it is overwhelmed and has a modest bunch of associations who affect each other not majorly but gently enough to influence each other’s decisions.

The Women’s Fitness Centre falls under the Oligopoly model and is experiencing the law of diminishing returns; working in a focused business sector with saturation leaving little scope for new firms (Borjas, 2003).  Other firms also entered the market like The Darwin Fitness Centre which raised competition for it. The new firms also are sharing their profits now leading to stabilizing the profits that were earlier rising.

Economics for Managers

Answer 6.

The calculation that will arrive at the firm’s profit-maximizing output is as below:

Accounting for Managers


MC = (1/5) Q

Price = $2

If MR = MC = Price


1/5Q = 2

Q = 10 units.

Equilibrium level of output of the firm:

The revenue of the firm:

Quantity X Price

10*2 = $ 20

Revenue is equal to the Total Cost of the firm at the equilibrium level.


R = TC = $ 20

There are a total of 100 firms

Hence the average total cost will be

= 20/100 = $0.2 or 1/5


The equilibrium output is 10 units.

Economics for Managers

Answer 7.

Output Total cost (Fixed Cost + Variable Cost) Fixed cost Variable Cost Average Variable cost  (Total Variable Cost / Units of output) Average Total Cost (Total Cost / Units of Output) Marginal Cost (Change in total cost / Change in total quantity)
1 850 800 50 50 850.00
2 900 800 100 50 450.00 50
3 950 800 150 50 316.67 50
4 1000 800 200 50 250.00 50
5 1050 800 250 50 210.00 50
6 1100 800 300 50 183.33 50
7 1150 800 350 50 164.29 50
8 1200 800 400 50 150.00 50
9 1250 800 450 50 138.89 50
10 1300 800 500 50 130.00 50
11 1350 800 550 50 122.73 50
12 1400 800 600 50 116.67 50
13 1450 800 650 50 111.54 50
14 1500 800 700 50 107.14 50
15 1550 800 750 50 103.33 50

Economics for Managers

Answer 8.

  1. The strange disappearance of the Malaysian aircraft will raise a question on security. It will consequently diminish the requests for similar journeys affecting adversely, the demand; the level of supply staying impassive and unchanged (Akerlof & Yellen, 1990). The result will be a decrease in costs and an increase in expenses. The same has been given reflected in the graph underneath were a diminishing in the level of interest from D1 to D2 will
  2. Decrease the cost from P1 to P2. The impact has adverse effects on the airline’s business.
    Economics for Managers
  3. As the wages expand there will be more work supply for the air workforce. This will affect work supply positively with the level of interest staying aloof. Thus, there will be a rise in competition and more unemployment (Akerlof & Yellen, 1990).
    Economics for Managers
  4. The above chart demonstrates how a decrease for the shoppers will bring down the interest for setting out globally from D2 to D1, which will at last result in the fall in cost from the point P1 to P2.
    Economics for Managers

Answer 9.

Business is all about the right choices, in all aspects. It helps in investigating and gauging the advantage when contrasted with the expenses it acquired, gauging the budgetary suitability of a specific business operation and thus, empowers the administration of ceasing proper choices that make all the difference (Mankiw, 2009).


  1. If a parent company is giving a thought to venture into another business the management needs to do certain research and analysis. This will calculate the cost associated with it and the related profit as a result of the former.
  2. If an organization decides to invest and expand its present status, it can investigate the monetary practicality of the advantage, the venture (Buultjens, 2006).
  3. If it is needed and recommended to employ managers and special staff, an organization will conduct its analysis as per, the requirement, implications and recommendations of colleagues in the same. All this study will decide finally if there has to be a staff expansion.
  4. 4 The administration will do an in-depth analysis of the feasibility before venturing into hiring an additional workforce as this is needed to raise profitability and gather income more efficiently to be able to pay the newcomers.

Accounting for Managers Sample

Answer 10.

With a specific end goal to choose, for raising the college course charges the Vice-Chancellor can consider the hypothesis of value versatility, keeping in mind the end goal. It will help him identify the impact made upon the quantum of enlistments because of the adjustment in the course expenses (Mankiw, 2009). The value versatility of interest will give a thought identifying with the response of the subjects to the adjustment in charges. The value versatility hypothesis expresses that the interest is viewed as consummately flexible on the off chance that it anticipates a higher change with a little change in cost (Buultjens, 2006. For the more prominent change in value, the interest does not change or there is a mellow change then the interest is viewed as inelastic. This flexibility essentially expresses the adjustment sought after with the adjustment in cost. The products that don’t have close substitutes have inelastic interest; subsequently regardless of an increment in the charges courses are liable to give a relatively higher income.

Economics for Managers

Economics for Managers


Akerlof, G. A., & Yellen, J. L. (1990). The fair wage-effort hypothesis and unemployment. The Quarterly Journal of Economics, 255-283.

Buultjens, J. (2006). A Comparison of Wage Determination in New South Wales and Queensland (Australian) Clubs. International Journal of Hospitality & Tourism Administration, 7(2-3), pp.135-153.

Borjas, G. J. (2003). The labor demand curve is downward sloping: Reexamining the impact of immigration on the labor market (No. w9755). National Bureau of Economic Research.

Chung, C. (2006). Quality bias in price elasticity. Applied Economics Letters, 13(4), pp.241-245.

Chang, H. (n.d.). Law and economics of immigration., (2015). Negative Externalities | Economics Help. [online] Available at: [Accessed 20 Sep. 2015].

Mankiw, N. G. (2009). Smart taxes: an open invitation to join the pigou club. Eastern Economic Journal, 35(1), 14-23.

Sarre, R. (2002, September). Private police: The future of policing and the broader regulatory framework. In Current Issues In Regulation: Enforcement and Compliance Conference (pp. 2-3).


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