Posted: March 5th, 2014
determine the market structure in which this frozen, low-calorie microwavable food company now operates.
Using the regression results and
the other computations from Assignment 1, determine the market structure in
which this frozen, low-calorie microwavable food company now operates.
[In assignment #1, the company
estimated a demand curve and used a marginal cost curve as its supply curve.
You determined the equilibrium in the market where P =MC [or Qs = Qd]. You
calculated the various elasticities using the estimated demand at its current
price of 500 cents. While not required, if you look at the own price elasticity
at the equilibrium price and quantity solved for in Assignment #1 you will
notice a problem for the firm if it thinks it is operating in a competitive
market.
Now that you know that the firm
faces a downward sloping demand curve and that it has pricing power, you are
being asked to rethink how the firm should behave in the market as it actually
used its pricing power to determine the profit maximizing price and output in
this assignment.
Use the Internet to research two
(2) leading competitors in the low-calorie microwavable food industry, and take
note of their pricing strategies, profitability, and their relationships within
this industry (within the USA and worldwide). Use the IBIS Report for the Frozen
Food Production Industry (SIC Code 31141) to be provided by your instructor.
Write a six to eight
(6-8) page paper in which you:
1.  Outline a plan that will assess the
impact of the market structure/cost data based on the activity in the first
assignment for the company�s operations. Use a supply curve of the following
form to reexamine your conclusions from the first assignment: Qs = -7909.89
+79.0989P [OR MC = 100 + 0.01264Q]. This new supply curve gives you the same
equilibrium price and quantity as before, but is based on the firm�s marginal
cost curve and its behavior in Assignment #1.
Further assume that the
estimate of the firm�s AVC = 100 + 0.009Q and that VC/TC =0.71 always [implying
that FC/TC = 0.289]. These are the industry average estimates from the IBIS
report for this industry.
2. Suppose the business operations have
now changed from the market structure analyzed in the activities required for
the first assignment due to this new data about costs. Determine two (2) likely
factors that might have caused the changed behavior. Predict the primary manner
in which this change would likely impact business decisions in the new market
environment.
3. Analyze the major short-run and
long-run production and cost functions implied by this new cost data for the
frozen, low-calorie microwaveable food company. Use the information contained
in the IBIS report. Suggest substantive ways in which the frozen, low-calorie
food company may use this information in order to make decisions in both the
short-run and the long run.
4. Determine the possible circumstances
under which the company should discontinue operations. While no specific fixed
or total cost data are provided, use the newly provided cost data above and
your knowledge from the textbook on the relation of fixed and variable costs to
revenue to develop estimates that might suggest key actions that management
should take in order to confront these circumstances. Provide a rationale for
your response.
5. Suggest one (1) pricing policy that
will enable your frozen, low-calorie microwavable food company to maximize
profits. Provide a rationale for your suggestion that will involve comparison
of the first assignments two possible price and quantity pairs with the new
optimum presented here in Assignment #2
6. Outline a plan, [based on the
original information provided in the first assignment along with the IBIS
report industry cost data for the firm], that 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.
7. Recommend two (2) actions that the
company could take in order to improve its profitability and deliver more value
to its stakeholders in line with the recent history and forecast future
behavior for the Frozen Food Production Industry [SIC Code 31141] as outlined
in the IBIS report. Outline, in brief, a plan to implement your recommendations.
8. Use at least five (5) quality
academic resources in this assignment. Note: Wikipedia does not qualify as an
academic resource.
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.
Expert paper writers are just a few clicks away
Place an order in 3 easy steps. Takes less than 5 mins.