1.VRIO is a four point framework used in strategic planning by business firms.The analysis helps us understand whether the firm has a competitive advantage or disadvantage, and to what degree, in the industry.

Analyzing the signing of All-Star pitcher Randy Johnson to a long-term contract by the New York Yankees in the VRIO framework:

1. Value: Signing a long-term contract with a star player is definitely a value-addition for the team. It will improve the overall performance of the team, which will attract more star players as well as fan loyalty.
2. Rare: Though other players in the competing teams might have exceptional skills, the skills possessed by Randy Johnson are rare. Skilled players are difficult to find yet highly demanded, and thus this action qualifies as rare.
3. Imitability: While the competitors might have players with similar strengths and performance standards, Randy Johnson himself cannot be replicated by other teams. The skills developed by Randy Johnson are a result of years of practice and experience and are not easy to imitate. Further, it is expensive to buy new good players. Since Johnson is signed on a long-term contract, it is not possible for other teams to acquire him in the near future. Thus, this action is hard to imitate.
4. Organized: If the New York Yankees have a stable management, processes, policies and culture which support the entry of Johnson into the team, then the action can capture the desired value for the team.

Thus, the action adds value, is rare and inimitable. It thus provides a competitive advantage to the team.

If the organization supports the action, it will lead to a sustained competitive advantage for the team. However, if the organization structure is not supportive of the action, there will be an unused competitive advantage.

2.If If the demand for a product is said to be relatively inelastic, the "absolute" value of the elasticity coefficient will be less than one.

The price elasticity of demand is a measure of the responsiveness of the quantity demanded to price changes.

%change in quantity demanded divided by the %Change in price gives the the value of price elasticity of demand (Ped). This value always comes in negative because changes in quantity demanded is inversely related to the changes in price. But in absolute value Ped is assumed positive.

Suppose, if the price elasticity of is calculated demand as - 0.75, then the absolute value of Ped will be 0.75.

For a relatively inelastic demand, the demand curve is steeply sloped. Any percent change in Price will yield a smaller percent change in quantity demanded and the price elasticity of demand is less than 1.

3.Initial total revenue (TR) = P x Q = 10 x 500 = 5000

Initial total cost (TC) = ATC x Q = 8 x 500 = 4000

(Case a)

New TR = 2P x (Q/2) = P x Q = 5000

New TC = 8 x (500 / 2) = 2000

New profit = TR - TC = 5000 - 2000 = 3000

(Case b)

New TR = P x 2Q = 10 x (500 x 2) = 10000

New TC = ATC x 2Q = 8 x (500 x 2) = 8000

New profit = 10000 - 8000 = 2000

Since profit is higher with case (a), I shall double the price at half quantity. However, with case (a), I maynot succeed if my estimate of decrease in quantity in response to doubling of price is incorrect. With case (b), I am assuming that my demand is perfectly elastic at price of $10 such that I can sell any output that I want to. This assumption maybe incorrect.