Book: Froeb and McCann, Managerial Economics—A Problem Solving Approach, 2nd edition, 2009
Questions:
United Supermarket located in Weatherford, OK occasionally holds a “better than tax free” sale for Saturday shoppers. Your total purchase will be reduced by 9.5% if you shop at United on a tax free day. Please provide at least two economic reasonings for this strategy.
Please provide two examples, one of adverse selection and one of moral hazard, in online learning.
Choose an online store you or your friends have shopped before.
Name the online store/website.
List and analyze their indirect price discrimination strategies.
In 2011, JCPenney hired Ron Johnson, a former Apple executive, to turn its sales around. Several strategies he conducted included:
He scrapped salespeople’s commissions in favor of fixed hourly wages.
He set up in-store boutiques for famous brands.
He eliminated coupons, clearance racks, and sales events, and introduced a “fair and square” pricing.
Being a customer, are you in favor of JCPenney’s “fair and square” pricing strategy? Why or why not.
Ron Johnson was dismissed on April 6th because he failed to increase JCPenney’s sales. Being a future Chief Executive Officer, what did you learn from his story? (Answer this question from the aspects of incentive mechanism and price discrimination)
You and a classmate are assigned as study partners. The following matrix shows the payoffs from shirking and working. If you both work hard, you both receive a grade of A. If one of you shirks, both of you will receive a grade of B and the shirker will receive happiness from leisure. If both of you shirk, you both receive a grade of C and happiness from leisure.
You
Shirk
Work
Classmate
Shirk
C+Leisure , C+Leisure
B+Leisure , B
Work
B , B+Leisure
A , A
Suppose both students rank the outcomes as follows:
A grade of B and leisure is better than
A grade of A and no leisure, which is better than
A grade of C…