Wednesday, September 11, 2013
Coordination Failures and Coordination Mechanisms - Due Wednesday 9/18
Some folks have already started the next Excel assignment. If you have any questions on it, please post them as comments to this post. And if you haven't yet watched the Excel Tutorial video, I strongly suggest that you watch it and view it full screen
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I have question about the last page, transfer pricing. For the monopsony part, I cannot get the output right. I think my answer is correct because if I plugged the number into the next question, which is about the transfer price, the answer is correct.
ReplyDeleteThe other question is for the next question, which asks about the quantity supplied by upstream and quantity demanded by downstream divisions. I am not sure about these two questions. I tried to use MC as supply and MB as demand, then calculate the quantity with the price of 42.41. But the answers were not correct. I am wondering how to do these two questions.
Thank you
You need to use Cell References to answer the question. That 42.41 price might be how Excel shows on the screen a number that really is an infinitely repeated decimal, but is shown with only two decimal places. By using that instead of the cell reference, you are creating a rounding error. This is covered in the Tutorial video which I encourage you to watch (full screen) if you haven't done so already.
ReplyDeleteDoes anyone have any idea how to solve the last two calculation problems on the last page. They are the questions on Q supplied in the upstream edition and Q demanded by the downstream division. I cat seem to figure them out.
ReplyDeleteNot to give away the answer, we're not close enough to the deadline for that, but my suggestion now is to try to solve this with pencil and paper away from the computer and see if you can understand it that way. Only then, go back to the Excel and type in the formulas.
ReplyDeleteEven using a pencil and paper away from the computer, I am still not understanding the last calculation problems, regarding the upstream and downstream division quantities at market price. Any help would be much appreciated!
ReplyDeleteLet's talk about the economics first and leave the calculation for a moment. The issue is when there is an outside market where a perfect substitute can be bought or sold at the market price, what should the transfer price be? The answer in that case us that the transfer price should equal the market price. This is discussed in M&R. If you are having trouble with the worksheet on conceptual grounds, I strongly encourage you to read that. (The detail starts on page 82. The topic begins on page 79.)
ReplyDeleteNow on the calculations themselves, the first time around where the market price is below what the transfer price would be in the absence of an outside market, the market price is given in cell F255. Use the cell reference instead of the number you see on the screen (which is a truncation of the true number) and then it should be like the calculations you've already done to this point. (Use cell reference for the Marginal Benefit and Marginal Cost parameters as well.)
I hope that helps. For the time being I'm going offline but I will be available, if not later tonight then certainly tomorrow morning. So if there are further questions, please ask.
It appears that the cell F255 is protected and referencing it is prohibited. All we can do is look what is on our screen.
DeleteHaving the same problem. Can't reference F255.
DeleteYou have to type out the cell reference in the formula bar. It wont let you click it.
DeleteI have a question about the transfer pricing tab on the Excel homework and it's the question that involves marginal pricing and output
ReplyDelete"When the transfer price is set by the central office...the optimal output is where marginal benefit equals marginal cost. This output is...?"
So I take my A, B, C, D values (which are 210, 0.24, 10.5, 0.35 respectively) and set up an equation using the marginal functions of benefit and cost.
Then I have A - BQ = C + DQ which, using the values I have, are 210 - 0.24Q = 10.5 + 0.35Q. Thus, 199.5 = 0.59Q and Q = 338.14 (rounded to two decimal places).
But the homework box shows that this is incorrect so I'm confused as to what or how else this "marginal benefit equals marginal cost" equation can be set up to get the proper optimal Q.
Thank you for your help!
THERE IS NO ROUNDING. YOU MUST USE CELL REFERENCES. TYPE THOSE INTO THE CELL WITH THE FORMULA. DON'T TRY TO COPY FROM PROTECTED CELLS.
ReplyDeleteUnless there is another way to reference the protected cell other than using the "=" and the cell reference, we are unable to reference protected cells.
DeleteYou have to type out the cell reference in the formula bar. It wont let you click it. it should work then.
DeleteLiterally just type the cell reference number after the "=". Because it's protected, you can't click on it, but you can still reference the cell in the formula by typing in the cell number.
Delete