Using the regression results and the othercomputations from Assignment 1, determine the market structure in which thelow-calorie frozen, microwavable food company operates.
Use the Internet to research two (2) of theleading competitors in the low-calorie frozen, microwavable food industry, andtake note of their pricing strategies, profitability, and their relationshipswithin the industry (worldwide).
Write a six to eight (6-8) page paper inwhich you:
- Outline a plan that will assess theeffectiveness of the market structure for the company’s operations.Note: In Assignment 1, the assumption was that the marketstructure [or selling environment] was perfectly competitive and that theequilibrium price was to be determined by setting QD equal to QS. You are nowaware of recent changes in the selling environment that suggest an imperfectlycompetitive market where your firm now has substantial market power in settingits own “optimal” price.
- Given that business operations have changedfrom the market structure specified in the original scenario in Assignment 1,determine two (2) likely factors that might have caused the change. Predict theprimary manner in which this change would likely impact business operations inthe new market environment.
- Analyze the major short run and long costfunctions for the low-calorie, frozen microwaveable food company given the costfunctions below. Suggest substantive ways in which the low-calorie food companymay use this information in order to make decisions in both the short-run andthe long-run.
TC = 160,000,000 + 100Q +0.0063212Q2
VC = 100Q + 0.0063212Q2
MC=100 + 0.0126424Q
- Determine the possible circumstances underwhich the company should discontinue operations. Suggest key actions thatmanagement should take in order to confront these circumstances. Provide arationale for your response. (Hint: Your firm’s price must cover averagevariable costs in the short run and average total costs in the long run tocontinue operations.)
- Suggest one (1) pricing policy that willenable your low-calorie, frozen microwavable food company to maximize profits.Provide a rationale for your suggestion.
(Hints:
- In Assignment 1, you determined yourfirm’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 = MCto determine your optimal price and optimal output level now that you havemarket power. Compare these values with the values you generated in Assignment1. Determine whether your price higher is or lower.)
- Outline a plan, based on the informationprovided in the scenario, which the company could use in order to evaluate itsfinancial performance. Consider all the key drivers of performance, such ascompany profit or loss for both the short term and long term, and thefundamental manner in which each factor influences managerial decisions.
(Hints:
- Calculate profit in the short run byusing the price and output levels you generated in part 5. Optional: You maywant to compare this to what profit would have been in Assignment 1 using thecost function provided here.
- Calculate profit in the long run byusing the output level you generated in part 5 and cost data in part 3 andassuming that the selling environment will likely be very competitive. Determinewhy this would be a valid assumption.)
- Recommend two (2) actions that the companycould take in order to improve its profitability and deliver more value to itsstakeholders. Outline, in brief, a plan to implement yourrecommendations.
- Use at least five (5) quality academicresources in this assignment. Note: Wikipedia does not qualifyas an academic resource.
Your assignment must follow these formattingrequirements:
- Be typed, double spaced, using Times NewRoman font (size 12), with one-inch margins on all sides; citations andreferences must follow APA or school-specific format. Check with your professorfor any additional instructions.
- Include a cover page containing the title ofthe assignment, the student’s name, the professor’s name, the course title, andthe date. The cover page and the reference page are not included in the requiredassignment page length.
The specific course learning outcomesassociated with this assignment are:
- Analyze short-run and long-run productionand cost functions.
- Apply macroeconomic concepts to changes inglobal and national economies and how they affect economic growth, inflation,interest rates, and wage rates.
- Evaluate the profit-maximizing price andoutput level for given operating costs for monopolies and firms in competitiveindustries.
- Use technology and information resources toresearch issues in managerial economics and globalization.
- Write clearly and concisely about managerialeconomics and globalization using proper writing mechanics.
