Discuss Business comparisons-short and long-term costs- Microeconomics
DISCUSSION QUESTION 1:
Short and Long-term costs business comparisons. Select directly comparison business concepts and generally discuss the FC, VC, break-even quantities, economies of scale and diseconomies of scale for each. Feel free to make assumptions, but don’t get into detailed cost analysis. Here’s a couple example/pairs: A food cart vs. Mom n Pop’s Diner. (or MnP Diner vs. a nice Sit-down Gourmet Restaurant that seats 100); the home-based handy-man vs. Joe’s plumbing and plumbing supply Store; Erica Smith’s Attorney at Law sole practice vs. the Miami office of Holland & Knight PA. Focus on their likely overhead, MR and MC. Also, consider long-run, what should they set up today if doing a new start.
DISCUSSION QUESTION 2:
High-, Middle-, and low-end retail. There is a bifurcation of the retail market. The low end (Dollar General, Dollar Tree, etc.) is doing great and should continue to do so for some time to come, and many high-end retailers (Tiffany’s, Polaris, HOG, HOTT, etc.) are doing well. But the middle market is hurting (TGT, Sears, JCPenny’s, etc.) Pick two publicly traded companies and compare them from before the recession through the recession and estimate where they will go into the next 5 to 10 years. Of the two companies, select from different levels with one being successful in the high- or low-end and one caught in the middle and struggling. For example, I might choose DG and SHLC. I can draw a chart of the two companies’ stock prices at Yahoo Finance: http://finance.yahoo.com/q/ta?s=SHLD&t=2y&l=on&z=l&q=l&p=&a=&c=dg This is a log chart so you see DG stock going up close to 100% in 3 years while Sears is down about 40%. Ouch!:-( … (But note that in economics we are concerned with revenues more than the price of the stock.)
