Economics
: Undergraduate
: Essay
: English (U.S.)
: 2 pages/550 words One source apa format due in 15 hours

BUS640.W5A1.10.2013
Description:
Total Possible Score: 7.00

1a. Describes a Skimming Price and a Penetration Price; and Advises Alba and Gavigan Which Price Should be Charged
Total: 1.00
Distinguished – Thoroughly describes a skimming price and a penetration price, and advises which price Alba and Gavigan should charge, with supportive reasoning for and against each pricing alternative.
Proficient – Describes a skimming price and a penetration price, and advises which price Alba and Gavigan should charge, with reasoning for and against each pricing alternative. Minor details are missing.
Basic – Partially describes a skimming price and a penetration price, and advises which price Alba and Gavigan should charge, with some reasoning for and against each pricing alternative. Relevant details are missing.
Below Expectations – Attempts to provide a description of a skimming price and a penetration price, and advises of which price Alba and Gavigan should charge; however, there is little or no reasoning for and against each pricing alternative and significant details are missing.
Non-Performance – The description of a skimming price and a penetration price, and advice of which price Alba and Gavigan should charge are either nonexistent or lack the components described in the assignment instructions.
1b. Discusses Why or Why Not Alba and Gavigan Can Make Economic Profits Initially and Continue to Make Economic Profits in the Long Term
Total: 1.00
Distinguished – Provides a thorough discussion of why or why not Alba and Gavigan can make economic profits initially and continue to make economic profits in the long term.
Proficient – Provides an adequate discussion of why or why not Alba and Gavigan can make economic profits initially and continue to make economic profits in the long term, but some minor details are missing.
Basic – Provides a partial discussion of why or why not Alba and Gavigan can make economic profits initially and continue to make economic profits in the long term. Relevant details are missing.
Below Expectations – Provides a minimal discussion of why or why not Alba and Gavigan can make economic profits initially and continue to make economic profits in the long term. Significant details are missing.
Non-Performance – The discussion of why or why not Alba and Gavigan can make economic profits initially and continue to make economic profits in the long term is either nonexistent or lacks the components described in the assignment instructions.
1c. Provides Advice to Alba and Gavigan to Help Them Make More Profit in the Long Term
Total: 1.20
Distinguished – Provides detailed advice of how Alba and Gavigan can make more profit in the long term.
Proficient – Provides an adequate discussion of how Alba and Gavigan can make more profit in the long term, but some minor details are missing.
Basic – Provides a partial discussion of how Alba and Gavigan can make more profit in the long term. Relevant details are missing.
Below Expectations – Provides a minimal discussion of how Alba and Gavigan can make more profit in the long term, but significant details are missing.
Non-Performance – The discussion of how Alba and Gavigan can make more profit in the long term is either nonexistent or lacks the components described in the assignment instructions.
2a. Provides a Description of a Bidding Price to Win the Project
Total: 1.00
Distinguished – Provides a thorough description of a bidding price to win the project.
Proficient – Provides a description of a bidding price to win the project, but minor details are missing.
Basic – Provides a partial description of a bidding price to win the project, but relevant details are missing.
Below Expectations – Attempts to provide a description of a bidding price to win the project, but significant details are missing.
Non-Performance – The description of a bidding price to win the project is either nonexistent or lacks the components described in the assignment instructions.
2b. Describes a Bidding Price to Maximize the Expected Value of the Contribution
Total: 1.00
Distinguished – Provides a thorough description of a bidding price to maximize the expected value of the contribution.
Proficient – Provides an adequate description of a bidding price to maximize the expected value of the contribution, but minor details are missing.
Basic – Provides a partial description of a bidding price to maximize the expected value of the contribution. Relevant details are missing.
Below Expectations – Attempts to provide a description of a bidding price to maximize the expected value of the contribution; however, significant details are missing.
Non-Performance – The description of a bidding price to maximize the expected utility value of the contribution is either nonexistent or lacks the components described in the assignment instructions.
2c. Defends the Answers with Discussion, Making any Assumptions You Feel Are Reasonable or Are Supported by the Information Provided
Total: 1.20
Distinguished – Thoroughly defends the answers with discussion, making any assumptions you feel are reasonable or are supported by the information provided.
Proficient – Adequately defends the answers with discussion, making any assumptions you feel are reasonable or are supported by the information provided, but minor details are missing.
Basic – Partially defends the answers with discussion, making any assumptions you feel are reasonable or are supported by the information provided. Relevant details are missing.
Below Expectations – Attempts to defend the answers with discussion, making any assumptions you feel are reasonable or supported by the information provided, but significant details are missing.
Non-Performance – The defense of the answers with discussion, making any assumptions you feel are reasonable or are supported by the information provided is either nonexistent or lacks the components described in the assignment instructions.
Critical Thinking: Explanation of Issues
Total: 0.20
Distinguished – Clearly and comprehensively explains in detail the issue to be considered, delivering all relevant information necessary for a full understanding.
Proficient – Clearly explains in detail the issue to be considered, delivering enough relevant information for an adequate understanding.
Basic – Briefly recognizes the issue to be considered, delivering minimal information for a basic understanding.
Below Expectations – Briefly recognizes the issue to be considered, but may not deliver additional information necessary for a basic understanding.
Non-Performance – The assignment is either nonexistent or lacks the components described in the instructions.
Written Communication: Content Development
Total: 0.10
Distinguished – Uses appropriate, pertinent, and persuasive content to discover and develop sophisticated ideas within the context of the discipline, shaping the work as a whole.
Proficient – Uses appropriate and pertinent content to discover ideas within the context of the discipline, shaping the work as a whole.
Basic – Uses appropriate and pertinent content, but does not apply it toward discovering or developing ideas. Overall, content assists in shaping the written work.
Below Expectations – Uses content, though it may be unrelated or inappropriate to the topic. Content does not contribute toward the development of the written work, and may distract the reader from its purpose.
Non-Performance – The assignment is either nonexistent or lacks the components described in the instructions.
Written Communication: Control of Syntax and Mechanics
Total: 0.10
Distinguished – Displays meticulous comprehension and organization of syntax and mechanics, such as spelling and grammar. Written work contains no errors, and is very easy to understand.
Proficient – Displays comprehension and organization of syntax and mechanics, such as spelling and grammar. Written work contains only a few minor errors, and is mostly easy to understand.
Basic – Displays basic comprehension of syntax and mechanics, such as spelling and grammar. Written work contains a few errors, which may slightly distract the reader.
Below Expectations – Fails to display basic comprehension of syntax or mechanics, such as spelling and grammar. Written work contains major errors, which distract the reader.
Non-Performance – The assignment is either nonexistent or lacks the components described in the instructions.
Written Communication: APA Formatting
Total: 0.20
Distinguished – Accurately uses APA formatting consistently throughout the paper, title page, and reference page.
Proficient – Exhibits APA formatting throughout the paper. However, layout contains a few minor errors.
Basic – Exhibits basic knowledge of APA formatting throughout the paper. However, layout does not meet all APA requirements.
Below Expectations – Fails to exhibit basic knowledge of APA formatting. There are frequent errors, making the layout difficult to distinguish as APA.
Non-Performance – The assignment is either nonexistent or lacks the components described in the instructions.
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Week 5 – Assignment
 Price Quotes and Pricing Decisions Applied Problems
Please complete the following two applied problems:

Problem 1:

Jessica Alba, a famous actress, starts the baby and family products business, The Honest Company, with Christopher Gavigan. Alba and Gavigan set up their site so families can choose what kinds of non-toxic, all-natural products they’d like to use and get them in a bundle. Families can choose all kinds of products from food to hygiene necessities and cleaning supplies. Suppose they are thinking of expanding their business into five domestic markets: Phoenix, Dallas, Chicago, New York, and Atlanta. Assume their primary goal of business is to maximize economic profits, although they want to do business honestly.

Show all your calculations and process. Describe your answer for each question in three- to five-complete sentences.

You are a business adviser for Alba and Gavigan. Describe a skimming price and a penetration price, and advise them whether they should charge a skimming price or a penetration price, with supportive reasoning for and against each pricing alternative.
Are they likely to make economic profits initially? Can they continue to make economic profits in the long term? Why or why not? Discuss.
What advice would you give to Alba and Gavigan to help them make more profit in the long term?

Problem 2:

You operate your own small building company and have decided to bid on a government contract to build a pedestrian walkway in a national park during the coming winter. The walkway is to be of standard government design and should involve no unexpected costs. Your present capacity utilization rate is moderate and allows sufficient scope to understand this contract, if you win it. You calculate your incremental costs to be $268,000 and your fully allocated costs to be $440,000. Your usual practice is to add between 60% and 80% to your incremental costs, depending on capacity utilization rate and other factors. You expect three other firms to also bid on this contract, and you have assembled the following competitor intelligence about those companies.
Issue
Rival A
Rival B
Rival C
Capacity Utilization
At full capacity
Moderate
Very low
Goodwill Considerations
Very concerned
Moderately concerned
Not concerned
Production Facilities
Small and inefficient plant
Medium sized and efficient plant
Large and very efficient plant
Previous Bidding Pattern
Incremental cost plus 35-50%
 Full cost plus 8-12%
 Full cost plus 10-15%
Cost Structure
Incremental costs exceed yours by about 10%
Similar cost structure to yours
Incremental costs 20% lower but full costs are similar to yours
Aesthetic Factors
Does not like winter jobs or dirty jobs
Does not like messy or inconvenient jobs
Likes projects where it can show its creativity
Political Factors
Decision maker is a relative of the buyer
Decision maker is seeking a new job
Decision maker is looking for a promotion  
Show all of your calculations and processes. Describe your answers in three- to five-complete sentences.

What price would you bid if you must win the project?
What price would you bid if you want to maximize the expected value of the contribution from this contract?
Defend your answers with discussion, making any assumptions you feel are reasonable and/or are supported by the information provided.

Carefully review the Grading Rubric (Links to an external site.) for the criteria that will be used to evaluate your assignment.