BUSINESS( NO PLAGARISM A+ WORK, ON TIME)
DISCUSSION1.docx Improving_decision_making_in_h.pdf 1. ASSIGNMENT ( NO MORE THAN 300 WORDS) Why study managerial economics? The most important task of a business manager is to make decisions. Decisions are the means by which organizations turn ideas into action and can have a positive or a negative impact. However, decision making can be a complicated process, especially in a business setting. Solving a problem requires comparing alternatives and thinking about the probable results. Furthermore, successfully implementing a decision can be just as much of a challenge. Every business decision will have direct and indirect results, influencing the future of the company. Consequently, a structured process for decision making takes away much of the uncertainty embedded in the decision making process. The six step decision making process is one such approach. The steps included in this are 1. defining the problem, 2. determining the goals and the objectives of the firms, 3. exploring the alternatives, 4. evaluating the alternative solutions, 5. selecting the optimum solution and 6. performing sensitivity analyses. https://saylordotorg.github.io/text_principles-of-managerial-economics/s03-demand-and-pricing.html The influence of the Macroeconomic Environment The general health of the economy has, of course, an influence on the firms. As we experienced in 2008-2010 when an economy enters a recession, consumers demand tends to be reduced for all products, and all businesses suffer. This is part of what is called the business cycle, which describes the succession of recessions and economic booms that all economies go through. Clearly, business managers have no power in this macroeconomic environment. It is important for them to be aware of it, however, if only because many governmental policies are decided as a response to the economic environment, and they directly affect all businesses. For instance, during the recent recession, the Federal Reserve (who is the central bank of the U.S. responsible for monetary policy) has decided to keep interest rates as low as possible. The goal was to stimulate the economy by encouraging consumers to consume (and borrow), and firms to invest which is what interest us here. Managers need to keep a close eye on these policies since the level of interest rates at which they can access credit has a direct influence on the costs of their projects. The mechanism used by the Federal Reserve (Fed) is also worth considering. The market for money operates just like any other market, with the price adjusting to find the equilibrium between demand and supply. The price of money, so to speak, is the interest rate. Thus, when the Federal Reserve wants to lower the price of money (the interest rate), it increases the money supply. This is done mostly by purchasing securities on the open market, which is the way the Fed injects money into the economy. Because of the depth of the recession of 2008-2010, the Fed has purchased several trillions worth of securities, pushing the money supply to very large levels. If the money supply is not reduced, it will result in high inflation over time – following a process that would be too long to discuss here. The answer may Read More …