Assignment 2: Operations Decision
Due Week 6 and worth 300 points

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Due Week 6 and w">

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Due Week 6 and w


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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:

  1. 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.
  2. 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.
  3. 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

  1. 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.)
  2. Suggest one (1) pricing policy that will enable your low-calorie, frozen microwavable food company to maximize profits. Provide a rationale for your suggestion.

(Hints:

  • 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.)
  1. 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.

(Hints:

  • 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.)
  1. 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.
  2. 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

 

1)

 

QD=-5200-42(500)+20(600)+5.2(5500)+0.20(10000)+0.25(5000)

 

=17650

 

The price elasticity

 

(p/q) change in Q/change in P)

 

And

 

Change in Q/change in P=-42

 

Hence price elasticity

 

EP= (P/Q) (-42) (500/17650)

 

=-1.19

 

Cross price elasticity

 

=20(600/17560)

 

=0.68

 

Elasticity of Advertisement

 

= (P/Q) (0.20) (5500/17650)

 

0.11

 

Income elasticity

 

= (P/Q) (52) (5500/17650)

 

=1.62

 

Elasticity of M

 

= (P/Q) (0.25) (5000/17650)

 

=0.07

 

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.

 

3)

 

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)

 

Q=38650-42P

 

Q=38650/42-Q/42

 

Hence the demand and supply curve is given by

 

P=-5200/45+Q/45

 

38650-42P=5200+45P

 

87P=33450

 

P+384.48

 

Q=5200+45(384.48)

 

Q=22501.6 4

 

Assignment 1 Price

 

550 demand 500 supply 450

 

400

 

350

 

300

 

250

 

200

 

150

 

100

 

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

 

demand curve.

 

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.

 

1994). 6

 

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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