First, in your initial post, introduce yourself by sharing your major concentration and describing how this course and program fit into your career goals.

Second, review Final Project Part I Guidelines and Rubric document and the Final Project Part II Guidelines and Rubric document in the Assignment Guidelines and Rubrics section of the course.

Then, select a company from the following list that you will research for both your final microeconomic analysis paper (Part I) and your final macroeconomic analysis paper (Part II):

Apple

Exxon Mobil

Johnson & Johnson

Procter & Gamble

Wal-Mart

Third, assuming you are the chief executive officer (CEO) of the company you chose, describe a situation in which you would use marginal analysis to make a business decision.

In creating your response, consider the following questions: What type of business decision would you make? How would you determine the marginal benefit and marginal cost of the decision? To what extent would you factor the opportunity cost of your decision? And what types of trade-offs would you likely face when you make your decision?

In responding to your classmates’ posts, further expand the course concepts related to the assigned questions. Be sure to ask engaging questions as needed to help your peers develop their ideas and support your posts with economic concepts from the course content and evidence from your research.

All discussion posts will be graded using the Graduate Discussion Board Rubric, which can be found in the Assignment Guidelines and Rubrics section of the course.

My name is Alison. I’m a teacher in Arizona making a big move career wise. I am taking this class to help me meet my ultimate goal of getting a MS in Accounting. It has been years since I have taken micro and macroeconomics.

I would like to do my projects on Apple. If I was the CEO of Apple, I would use marginal analysis when deciding whether to produce more Iphone 6s Plus or Iphone 6s. The Iphone 6s Plus phones make Apple more money than the other phone and doesn’t cost much more to make than the 6s. It does however cost the customers more and they may not want them sitting on shelves if they aren’t selling. Apple already does a great job of making the consumer want to continue to get the new models when they come out even when the differences in the phones are small. Another way I could use marginal analysis is to see if the higher cost of a phone is worth it if the consumer gets more features, better battery life, better camera, etc.

Identify a product or service produced by the company you selected for your microeconomic/macroeconomic analysis papers. Describe the inputs used to produce this product or service as well as the types of costs involved in its production.

Consider the following questions: What factors may affect the mix of inputs used to produce the product or service? To what extent does your chosen company benefit from economies of scale? What are the sources of economies of scale for your chosen company?

The company I selected was Apple. The Iphone is a big seller for them right now. The inputs used to produce the product would be the chip in the phone, battery needed to power the phone, the glass to protect it, and all the other parts needed to complete the phone. The production costs would include the manufacturing facilities in China, the warehouses where the unsold phones are kept throughout the USA, and the distribution that takes place throughout the USA and the World. Also, the employees required to make the parts as well as run the plants and other parts of the company. Apple benefits greatly from economies of scale. Since it is a large company, it can really benefit from the technology side of economies of scale since it produces so many devices. Being able to buy the parts needed in large quantities allows them to benefit from the marketing side of economies of scale. The marketing side also allows them to benefit from advertising since they can advertise one product and people are still directed to their website and see the many different products they offer. Apple is a worldwide name. It also benefits financially from economics of scale. Some people say that with the loss of Steve Jobs, Apple could see a diseconomies of scale since they may no longer have the managerial expertise they did before or his ideas that caused Apple to get where they are today. Also if they company gets too big it could cause external diseconomies of scale that Apple wouldn’t have control over.

http://www.businessinsider.com/

Miller, R. L., (2014). Economics Today (18th Ed.). N/A. Pearson

Define the industry related to the product or service produced by the company you selected for your microeconomic/macroeconomic analysis papers.

Consider the following questions: What are the main companies in the industry? What is the level of market concentration in the industry? To what extent are the products/services from this industry homogenous? How would you characterize the barriers to entry in the industry? How would you characterize the market structure of this industry? How does the market structure affect the business strategy and performance of the company you selected ? To what extent may the market structure in the industry lead firms to engage in anticompetitive behaviors?

I am doing research on Apple’s IPhone. There are many companies with many different phone options for people but Apple is still very high in the market.

Competitors

The market has changed quite a bit over the last ten years. Ten years ago Nokia lead the market followed by Motorola. Now the market is led by Samsung followed by Apple. The changes could be attributed to the introduction of the smartphones and the changes in the operating systems. China is a huge competition because they are able to produce the parts needed to make the devices at a low cost. Mergers in the cellular industry also affect the market.

• Samsung
• Motorola
• HTC
• LG
• Microsoft

I believe that cellphones from each company are heterogeneous. They have different operating systems, sizes, memory, CPU, color, etc. Within each company the phones can be homogeneous depending on what changes are made from year to year and from model to model. One thing they all have in common though is that you can make/receive calls and texts, use apps and the internet.

The barriers to entry in the industry include the cost to start up a new company of even add a new smartphone to a company that hadn’t had one before. You would also need the backing of one of the larger cellphone or electronic companies to get the word out about your phone. The parts need to be of a high quality to compete in today’s market.

The smartphone industry is an oligopoly. It is dominated by several companies and there are only a small amount of companies in the industry to begin with. The cellphone industry is also an oligopoly and without the big companies providing us service, we may not have the smartphones we have today.

Miller, R. L., (2014). Economics Today (18th Ed.). N/A. Pearson

http://www.gizmodo.com.au/

www.apple.com

Identify three macroeconomic variables in the United States that impact the supply and/or demand of the product or service produced by the company you selected for your microeconomic/macroeconomic analysis papers. Interpret the trends of the three selected macroeconomic variables for the past three years and evaluate how these trends will likely impact the supply and demand of your chosen product or service as well as the financial performance of your chosen company.

Current US Inflation Rates: 2006-2016. Retrieved from http://www.usinflationcalculator.com/inflation/current-inflation-rates/

• Unemployment Rate – This could affect Apple in two different ways.
  • Lack of jobs in the U.S. – Over the years, companies like Apple who have quite a bit of their production in other countries have come under fire. People want to know why they don’t produce their parts in the U.S. While moving production to U.S. would create a lot more jobs, Apple would not be able to get the profit it currently gets or continue to be able to keep its costs down. This would cause them to have to raise their prices which would most likely lower the demand and then the supply would be high.
  • No job = no money – When the unemployment rate rises, consumers often buy less. If a person doesn’t have a job, they can’t afford to go buy an expensive item.
• Economic Growth; specifically Gross Domestic Product (GDP) – If we were to have two quarters in a row with negative GDP growth, we would be considered in a recession. This could be bad for Apple because it could cause people to buy only necessities and put things like high priced smartphones on the back burner for now. Recessions make consumers nervous and they want to keep their cash in case it is needed.
• Inflation – measures the rate in which changes are made to the overall price of the goods and services. Inflation can happen on a yearly basis but it can be a concern if it hits high levels. In the last 10 years, the inflation rate has been between 4.1% (in 2007) to 0.1% (in 2008). Over the last three years, the numbers have been pretty similar, 0.8%, 0.7%, 1.0%. Looking at the trends shows that the rate is likely to change slightly over the next year but not tremendously. If inflation were to stay the same then the supply and demand wouldn’t be affected. If inflation were to rise then the price of the iPhone would rise and that would cause demand to go down. Historically, consumers tend to not buy items that increase in price in a time of inflation. They will most likely look for a cheaper alternative. If demand were to go down then supply would go up if there was no change in manufacturing and production. If the inflation rate was predicted to go up and Apple were to prepare for that, then they could cut down on the supply order so they were ready for the lowering demand of their product.
  • Miller, R. L., (2014). Economics Today (18th Ed.). N/A. Pearson

Describe the characteristics of the current monetary policy and fiscal policy in the United States. Predict how possible changes in monetary and/or fiscal policy may impact the supply and demand of the product or service produced by the company you selected for your microeconomic/macroeconomic analysis papers as well as the financial performance of your chosen company. This discussion will help inform the macroeconomic policies section of Final Project Part II.

According to the Monetary Policy Report (2016), consumer spending has been on the rise and they anticipate that the real GDP will also increase due to in part the accommodative monetary policy and higher household spending due to oil prices dropping. The rise of consumer spending is great for Apple, Inc. This could mean more people will be able to have the funds to spend it on smart phones. More spending on non-necessity items would require their demand for iPhones to go up which could mean they either need to increase their current supply or risk having a supply not large enough to meet the demand.

The Federal Reserve Board increased the interest rate for the first time in years. They are suspected to raise interest rates another time this year as well. The interest rate hike means that banks can now start giving out riskier loans since they will have more in their reserves. This could be good for Apple in that the company could now open new stores and get loans to help them get more business. It would also be a bad thing for Apple since the bank could give out riskier loans and if those loans fail, the interest rates of those who pay their bills on time could also go up to cover the costs.

The Monetary Policy. (2016). Board of Governors of the Federal Reserve System. Retrieved

from https://www.federalreserve.gov/monetarypolicy/mpr_20160210_summary.htm