Question

We have really covered a lot of subjects. We would love to hear what your take away is:

• for those things you think you will use the most;
• what you found most interesting; and
• what you never knew before.

Looking back here is the list.

1. Use the rational-actor paradigm, identify problems, and then fix them.

2.Use benefit-cost analysis to evaluate decisions.

3. Use marginal analysis to make extent (how much) decisions.

4. Make profitable investment and shut-down decisions.

5. Set optimal prices and price discriminate.

6. Predict industry-level changes using demand and supply analysis.

7. Understand the long-run forces that erode profitability.

8. Develop long-run strategies to increase firm value.

9. Predict how your own actions will influence other people's actions.

10. Bargain effectively.

11. Make decisions in uncertain environments.

12. Solve the problems caused by moral hazard and adverse selection.

13. Motivate employees to work in the firm's best interests.

14. Motivate divisions to work in the best interests of the parent company.

15. Manage vertical relationships with upstream suppliers or downstream customers.

Answer 1

Answer Yational orto paradigm says people out satimally. optimally, self-interstedly Ex: They respond to incentives to change behaviour you must change Incentives Mistakes in rational actol paradigm are made for one of two reasons. (i) bad incentives (i) lack of information. How to fix them; (1) one person make the decision and other one with better information of incentives (1) Information flow must be changed. (5) Incentives must be changed. (iv) reward scheme must be changed

2. Benefit - cost analysis :- * it is a tool wed to systematically develop useful information about the desirable & un desirable effect of public projects performing cost benifit analysis & Analyse results and make an informed 4 final recommendation * By using aggregate information compare the cost and tenefit * we have to establish a framework to outline the parameters of the analysis. companies use Marginal analysis as a decision-making tool to help them Maximize Their potential profits. into small steps we for Break The decision external decisions.

more benefit forward & taking a step provides Than cost, take a step * if not, step backward. * This analysis tells us The direction of change but not distance. only MR and Mc can be measured. The current level of output * * If The benefits of selling another unit (MR) are bigger Fan The cost (MC) Then sell another unit. 6) it produce more when MRJ Mc Gil at produce less when MRL MC Gai) it profits less where MREMC of prased on brothered by in their decision making are not ernotions Investors The any procese * The want capacity to do what you want, when you how you want is the blood line of capatillism

* Due to profit notit predictiona predictions more businesses are and forecasts shut down. many au companies (business) are disputed and incorrect; depending on the agenda of The owner . at this time they think of small business that Individually Invested. * By This it is known that Just because it Makes Money sense doesn't mean it makes Cconomic Serve. Business Their understand what Mistakes have done and why they are shutting down . . * And for what it is affecting and how This react against the app. cost of the investment.