Case Assignments 6 & 7

Please read the scenarios in the uploaded case assignments (first two documents) and answer the questions in each case assignment.

Case Assignment 6 – “Analyzing Managerial Decisions: United Airlines”
Case Assignment 7 – “Analyzing Managerial Decisions: iTunes Music Pricing”

Chapters 6 & 7 is uploaded for your review and will assist you in answering the questions in the case assignments.

*When you are answering the questions remember to focus on the economic reasoning behind the problems. Also use the information in the chapter to suggest economic solutions. Try to include outside sources along with your text book.*

Book Reference: Brickley, J.A., Smith, C.W., & Zimmerman, J.L (2009). Managerial economics and organizational architecture (6th ed.). New York: McGraw-Hill/Irwin

Solution Preview

Case Arguments 6 & 7

Analyzing Managerial Decisions: United Airlines

It would be economically wrong for the United Airlines to stop their flights to Washington D.C from San Francisco because of the WSJ’s analysis, which indicated that the company was not covering their costs. For this reason, the firm was losing revenue by continue with their operations on the route. Instead of discontinuing the flights, the firm should conduct an internal marginal analysis. The evaluation cross-examines the increased costs and benefits when a decision is made. The marginal analysis examination will allow the United Airlines to know the opportunity costs of both discontinuing and continuing the flights from San Francisco to Washington D.C. In the analysis, the firm should identify the fixed and non-fixed costs (Brickley, Smith & Zimmerman, 2009).

(775 words)