Strayer University Big Time Entertainment Price Elasticity of Demand Essay

Description

In this week’s discussion you are going to be the CEO of a company. In anticipation of the upcoming quarterly disclosure of profits, you prepare your Board of Directors for the pressure that cost-push inflation is having on profits. There will be some erosion of profits:Big Time Entertainment – Big Time Entertainment is a nationwide firm providing movies, arcades and other in person entertainment venues such as bowling and roller skating. Our operations have been heavily impacted during the Covid-19 pandemic. On reopening we have been faced with a host of regulations that have greatly increased our cost of operations. We also face uncertainty as to the potential for additional shutdowns. Customers are fearful plus the guidance on operating our facilities means we are operating far below our optimal number of patron to cover the higher cost for cleaning and other measure to protect the public and our employees. Price elasticity of demand is 1.6 and we are also faced with more competitors, online entertainment and gaming, that are not experiencing these cost pressures. Now explain:Is the demand curve for your product relatively elastic, inelastic or unitary elastic? Demonstrate for your company’s product, by how much the quantity demanded will change if you pass on a 10% increase in cost. In other words, show your calculation of the percentage change in the quantity demanded if your prices are raised by 10%. You must provide a calculations showing the percentage change in quantity demanded. Given your company’s price elasticity of demand and the industry supply/competitive environment you face, prepare a statement for your board as to the potential impact on profits. Who will pay the larger share of the cost increases, your firm or your customers?

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Case Study Style –
Designed for Presenting
Solutions and
Advocating for Policies
ECO550 2021
Case Study Style
In case study style writing you, the author, are the protagonist, the teller of the
story. You are also the expert. It is your job to tell the story in a way that leads
the reader to understand your solution.
Picture yourself as an attorney making closing arguments. What you lead with is:
“Ladies and gentlemen of the jury, my client is innocent.”
What do you do next: here are the facts to consider….
Brief, Direct and Use of Active Voice
Presented below is an example of using active voice and case style writing from
the Discussion Preparation for the week 1 discussion on Post-Investment Hold.

Holdup Problem, Airline Edition


Brief and Direct
How to be brief and direct. You don’t have to tell the whole story in the first
sentence. Here is what not to do “Hold-up arises when part of the return on an
agent’s relationship-specific investments is ex post expropriable by his trading
partner. … Once such an investment is sunk, the investor has to share the gross
returns with her trading partner. This problem, known as hold-up, is inherent in
many bilateral exchanges.”
http://www.columbia.edu/~yc2271/files/papers/holdup.pdf
Be brief, post investment hold up occurs when two partied have made an
agreement and one party uses the leverage of the agreement to rob the other
party of the benefit of the agreement.
Brief then Clarify
Be brief, post investment hold up occurs when two partied have made an agreement and one
party uses the leverage of the agreement to rob the other party of the benefit of the agreement.
In the week 1 discussion preparation the example is given of passengers who purchased an
airplane ticket to travel from India to England. They begin the trip and the then are held up by
the crew of the plane. Specifically, in a stop in Italy the crew demands extra money to continue
the trip. All the elements of a post investment hold-up are here.
1.
The investment, air transportation from India to England is a contact with specific use, i.e.
travel from point A to point B
2.
The two parties agreed to the terms and relied on the agreement to set out on the trip.
3.
Part way through the trip the provider of the transportation, breaches the contract, “to
finish the flight to England, you must pay the plane’s crew more money or else we do not
continue.” Clearly a hold-up
4.
The passengers had to pay-up to finish the trip.
Things to Notice
Be brief, post investment hold up occurs when two partied have made an agreement and one
party uses the leverage of the agreement to rob the other party of the benefit of the agreement.
In the week 1 discussion preparation the example is given of passengers who having purchased an
airplane ticket to travel from India to England, are held up by the crew of the plane, in a stop in
Italy, for extra money to continue the trip. All the elements of a post investment hold-up are
here.
1.
The investment, air transportation from India to England is a contact with specific use, i.e.
travel from point A to point B
2.
The two parties agreed to the terms and relied on the agreement to set out on the trip.
3.
Part way through the trip the provide of the transportation, breaches the contract, “to
finish the flight to England, you must pay the plane’s crew more money or else we do not
continue.” Clearly a hold-up
4.
The travelers were unable to enjoy the reliance on the agreement. After the agreement
they incurred unexpected cost, an extra payment extorted by the crew to deliver the
flight.
Active Voice: Conclusion
You will agree there is only one possible conclusion. The example of the failed
flight from India to England meets all the criteria for post investment holdup.
There was an agreement. Party A, the crew, breached the agreement. The
agreement involved a very specific service, a flight from India to England.
Parties B, the travelers having relied on and embarked on the trip could not
easily complete the trip if the crew refused to deliver the flight. Their
investment was sunk, gone, not recoverable. Their options, be stranded the
breach, or pay more. They were forced to pay more. One must conclude, one
way to identify post investment holdup is if one’s inner-ear hears the words
“stick em’ up!
What You Did, and Did Not, See or Hear
I was the protagonist. I told the story and I never used the word, I.
Use short sentences. Don’t try to tell everything up front, break it up and keep
it moving.
You don’t have to relate every element of a story to capture the essence of the
story. Be direct. Tell the parts you need to make your case.
Short, direct writing keeps the reader interested. Part of the case study style is
to keep the readers attention via pace.
Use of active voice, “you will agree” “you will know post investment hold-up
when one’s inner-ear hears stick em’ up.”

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Tags:
price elasticity

movie analysis

quantity demand

unitary elastic

Time Entertainment

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