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Managerial Decision Making

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1. Is it fair for a luxury goods company to raise prices on their "It" bag of the season? Why or why not?

It seems fair for a number of reasons. First, the price is one of the reasons why the bag is so special. If many people can afford it, it will loose its ‘desirability’ and the sense of its ‘uniqueness’. Second, no one forces them to buy this bag for the high price, as this is not an essential good and people can live without it. Third, company raise prices, because they know that the demand for the items will be high even with the new price, even though it is not an essential product.

2. Upon graduation, you are offered a job at a good company for $55,000, non-negotiable. You find out the company offers $62,000 to graduates of NYU and Columbia. Do you take the job? Why or why not?

I will take the job if I am satisfied with the offer. It seems fair that students from more prestigious universities get the higher wages. There is an assumption that NYU and Columbia have more sophisticated programs and great professors, so the average graduates have more knowledge and training for the future job. Also, many people think that it is harder to get into these universities, so the students are very hard working and aim for the best results. Some people might think that this is unfair since students are evaluated based on the school profile or how great the school is and overlook the actual knowledge they have. However, after some time, in most cases the good employee will get a raise, no matter what school this person went to.

3. A pharmaceutical company sells a pill that clears up a mild skin condition. However, they then discover that it cures lung cancer. They triple the price. Is this fair or not?
The company that created the cure for lung cancer should get a reward as they made a great discovery that can save many lives. Even though the development was unexpected but they put an effort and resources to it. From the company’s point of view, it seems fair to have a higher price as a reward for their discovery. However, from the customers’ perspective, dramatically raising the price does not seem ethical. In this case, the government should step in and regulate the prices on this treatment since, the pill is considered to be an essential medication to cure lung cancer.

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