Posted: April 7th, 2024

ECO 329 – Determine the market structure in which the low-calorie frozen

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
4
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.)
5
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.)
6
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.)
7
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.
8
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.

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