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There are three questions in this assignment

Economics

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There are three questions in this assignment.   For numerical questions, please show all work to receive credit. For the essay question, please use at least 5 references and please use citations in the body of the paper.  You can use the APA style to list references.  Please be sure you do not exceed the match of 20% (not all in one quote) and avoid cut & paste and copying from other sources.   All the best.

I. Price Discrimination (30 points) 

U.S. ASF-Keystone, Inc. supplies the raw steel necessary produces rail car part from locomotive motors to braking systems.  As both South Korea and Canada are engaged in expanding mass transit to curb carbon emissions, ASF-Keystone considers them to be good potential markets.  Their economic division estimates the markets for these countries as given below:

 

 

 

Using this information and applying the concept of Price Discrimination (Ch. 9), answer the following questions, which can be useful for both the production and marketing divisions of  

a. How much ASF-Keystone should sell in the Canadian market vs. the South Korean market and why?

 

b. What will be the price, revenues, and profits if ASF-Keystone does not discriminate between the two markets? Show all work. 

 

c. If ASF-Keystone engages in price discrimination, what prices it will change in each of the sub markets. Why? 

 

d. Compare and contrast the revenue, price, and profits between nondiscrimination and discrimination cases. 

 

e. What are the assumptions/factors necessary for ASF-Keystone to continue to discriminate? 

 

II: Wayfair (Show all work to receive credit)  (35 points)

Wayfair of Dallas is having a sale of their popular Simmons Sofas.  They operate in a monopolistic competition market.  Wayfair hires an economic consultant to estimate the price which they should price their sofas and how many to produce.  The consultant estimates the demand function as follows:

                     P = 925 – 6 Q 

Where P = Price of sofas and Q = number of sofas sold per month

The consultant further estimates the cost function as:

                     TC = 25,000 + 25 Q – 6 Q2 + 1/3Q3                   

Given these equations, 

(a) Determine the price and output which Wayfairwill maximize profits in the short-run

(b) How much Wayfair will earn in profits at this price and output rate?

(c) Suppose there is a rise in the rent of Wayfairstores rise by 20%.  Calculate the impact upon the firm’s price, output and profits.  Provide an explanation to your answers.  

(d) What strategies can Wayfair pursue to increase sales and profits besides raising the price of sofas?  Example, using examples. 

 

II. E-COMMERCE: (35 points)

 

E-commerce has taken strides during the CovidPandemic.  A recent report from the U.S. census has tracked this growth which is apparent from the link below: 

https://www.census.gov/library/stories/2022/04/ecommerce-sales-surged-during-pandemic.html

E-commerce further accelerated in 2020 with government restrictions, mask mandates and social distancing practiced by businesses as globally two billion people bought goods and service using e-commerce.  

The growth of online sales has posed challenges and opportunities for department stores/malls.   Sales from these outlets have decreased from $60 billion in 2000 to less than $40 billion in 2018 – during the same period, e-commerce rose from almost nothing to $120 billion in 2018 and to $814 billion in 2020 with the onset of Covid.  There are early signs that shoppers may slowly return to in-store shopping as the incidence and deaths connected with Covid has eased. 

In this essay, please address the following using scholarly and academic sources:

 

(a) Besides Covid, explain the principal factors - demographic, socio-economic, lifestyle, behavioral and technological - which have contributed to these trends.  

 

(b) which sectors of the economy prospered and which were hurt as a result of e-commerce and pandemic restrictions?  Identify any three of them and give reasons each for their success and any three of them which were severely hurt offering reasons. 

 

(c) which segment of the buyers are most likely to remain loyal to online shopping and why?  As a result of Covid, which population cohorts who were loyal to in-store shopping have moved to e-commerce and may have changed their behavioral and shopping patterns?  Why? 

 

(d) Offer some winning and profitable strategies that departmental stores, grocery stores, restaurants and other retail outlets can adapt/reposition their competitive positions to remain viable/profitable.  

 

Please upload the final version in Turnitin before the deadline.