Assignment 2: Operations Decision
Due Week 6 and worth 300 points
Using the regression results and the other computations from Assignment 1, determine the market structure in which the low-calorie frozen, microwavable food company operates.
Use the Internet to research two (2) of the leading competitors in the low-calorie frozen, microwavable food industry, and take note of their pricing strategies, profitability, and their relationships within the industry (worldwide).
Write a six to eight (6-8) page paper in which you:
- Outline a plan that will assess the effectiveness of the market structure for the company?s operations.Note:In Assignment 1, the assumption was that the market structure [or selling environment] was perfectly competitive and that the equilibrium price was to be determined by setting QD equal to QS. You are now aware of recent changes in the selling environment that suggest an imperfectly competitive market where your firm now has substantial market power in setting its own ?optimal? price.
- Given that business operations have changed from the market structure specified in the original scenario in Assignment 1, determine two (2) likely factors that might have caused the change. Predict the primary manner in which this change would likely impact business operations in the new market environment.
- Analyze the major short run and long cost functions for the low-calorie, frozen microwaveable food company given the cost functions below. Suggest substantive ways in which the low-calorie food company may use this information in order to make decisions in both the short-run and the long-run.
TC = 160,000,000 + 100Q + 0.0063212Q2
VC = 100Q + 0.0063212Q2
MC= 100 + 0.0126424Q
- Determine the possible circumstances under which the company should discontinue operations. Suggest key actions that management should take in order to confront these circumstances. Provide a rationale for your response.(Hint: Your firm?s price must cover average variable costs in the short run and average total costs in the long run to continue operations.)
- Suggest one (1) pricing policy that will enable your low-calorie, frozen microwavable food company to maximize profits. Provide a rationale for your suggestion.
- In Assignment 1, you determined your firm?s market demand equation. Now you need to find the inverse demand equation. Having found that, find the Total Revenue function for your firm (TR is P x Q). From your firm?s Total Revenue function, then find your Marginal Revenue (MR) function.
- Use the profit maximization rule MR = MC to determine your optimal price and optimal output level now that you have market power. Compare these values with the values you generated in Assignment 1. Determine whether your price higher is or lower.)
- Outline a plan, based on the information provided in the scenario, which the company could use in order to evaluate its financial performance. Consider all the key drivers of performance, such as company profit or loss for both the short term and long term, and the fundamental manner in which each factor influences managerial decisions.
- Calculate profit in the short run by using the price and output levels you generated in part 5. Optional: You may want to compare this to what profit would have been in Assignment 1 using the cost function provided here.
- Calculate profit in the long run by using the output level you generated in part 5 and cost data in part 3 and assuming that the selling environment will likely be very competitive. Determine why this would be a valid assumption.)
- Recommend two (2) actions that the company could take in order to improve its profitability and deliver more value to its stakeholders. Outline, in brief, a plan to implement your recommendations.
- Use at least five (5) quality academic resources in this assignment.Note:Wikipedia does not qualify as an academic resource.
Your assignment must follow these formatting requirements:
- Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
- Include a cover page containing the title of the assignment, the student?s name, the professor?s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
- Analyze short-run and long-run production and cost functions.
- Apply macroeconomic concepts to changes in global and national economies and how they affect economic growth, inflation, interest rates, and wage rates.
- Evaluate the profit-maximizing price and output level for given operating costs for monopolies and firms in competitive industries.
- Use technology and information resources to research issues in managerial economics and globalization.
- Write clearly and concisely about managerial economics and globalization using proper writing mechanics.
Click here to view the grading rubric.
I attached the previouse assignment that you compeleted for me please! give me origanl paper APA format with title page and headers
Running head: Assignment 1 Demand Estimation Thomas Simmons Strayer University
Instructor Dr. Zohre Ardalani 1 2
Assignment 1 Demand estimation
The price elasticity
(p/q) change in Q/change in P)
Change in Q/change in P=-42
Hence price elasticity
EP= (P/Q) (-42) (500/17650)
Cross price elasticity
Elasticity of Advertisement
= (P/Q) (0.20) (5500/17650)
= (P/Q) (52) (5500/17650)
Elasticity of M
= (P/Q) (0.25) (5000/17650)
2) -1.19 is the price elasticity and these indicate the 1%increase in the price of the product which leads to the quantity demanded dropping by relatively 1.19% and
the demand of the product is elastic and an increase in the income will scare the
consumer away from purchasing the product
Cross price elasticity is 0.68. shows that if the price of the product of the
competitors goes up by 1% then quality demanded of the given product will definitely
increase by 0.68 and the therefore the product will be fairly inelastic to the price of the
competitor and there will be an existence of no need to be concerned about the
competitor since pricing will not affect the price of the product in any way. 3
Assignment 1 Advertisement elasticity is 0.11.This indicates that an increase of 1% in the
advertising expenditure will automatically raise the quality demanded by 0.11% and the
demand will be inelastic to advertisement and more advertisement doesn?t automatically
means a company can raise the price because that could drive the consumer away.
Elasticity of microwave is 0.07.It shows that an elevation of 1% in the number of
oven in the area increase the quality demanded by a relatively 0.07% and demanded is
inelastic and the pricing of the product strategy can be simply skip such element.
Income elasticity is 1.62. This show that a % rise in the average area income will
relatively improve the quality demanded by 1.62% and the product is elastic hence the
company can make decision to raise if the average income rise in the market.
The price elasticity is greater than one in absolute value and therefore a
decrease in the price elasticity will definitely leads to a greater increase in the quality
demanded which may leads to an increase in the market share. This is because the
company share as the PED is higher than 1.19. 4) Q=5200+45P(Q=-7909.89P) And the demand equation is given by;
Q=5200-42(p) +20 (600) +0.2 (10000) +0.25(5000)
Hence the demand and supply curve is given by
Assignment 1 Price
550 demand 500 supply 450
50 0 5000 10000 15000 20000 25000 30000 Quantity
The product demand data shows the demand of low calorie food will be
impacted if there is a change in the consumer income, the pricing of a competitor product and the
price of correlating goods. This change happen basically as a results of change in consumer?s
preference. Which results in a change in the amount of product supplier, progression in 5
Assignment 1 production technologies in addition to the other element like labor and the raw materials which
may be availability change which directly affect production cost (Steven M. Sheffrin 2003). . 5) An increase in the consumer preference for a particular product could cause a right shift of the demand curve for he product as well as he population increase of
preference for a given product. A reduction in earnings would impact demand curve .In
addition the elevated price of the complementary product could adversely affect the
Another factor is the technological advancement in food production which
increase the availability of cheap labor and raw material and government tax subsidies
can cause a rightward shift of supply curve and a leftward shift can be cause by a
decrease in availability or an increase in price of labor and raw material.,( Fair, R.C.
Assignment 1 Reference
Steven M. Sheffrin (2003). Economics: Principles in action Upper Saddle River, New
Jersey 07458: Pearson Prentice Hall. pp. 81?82. Case, K.E., Fair, R.C. (1994). 'Demand, Supply, and Market Equilibrium', Chapter 4
in Principles of Economics, 3rd ed., Prentice Hall Englewood Cliffs, New Jersey
Friedman, Milton (December 1949). "The Marshallian Demand Curve". Journal of
Political Economy 57 (6): 463
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