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.

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Using the regression results and the other computations from Assignment 1determine the market structure in which the lowcalorie frozenmicrowavable food company operates.

Use the Internet to research two (2) of the leading competitors in the lowcalorie frozenmicrowavable 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 1determine 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 lowcaloriefrozen microwaveable food company given the cost functions below. Suggest substantive ways in which the lowcalorie food company may use this information in order to make decisions in both the short-run and the long-run.

Possible Solution

Market Structures for Microwavable and Low- Calorie Frozen Food Company

The company operates in a perfect competitive market since there are other companies in market producing similar goods. The profitability of a business will determine the effectiveness of the perfect competitive market structure, in which it exists (Beynon-Davies, 2013). In a market environment characterised by significant competition, the companies are price takers, which implies that the demand and supply forces in the market.

Market Structure Effectiveness Plan

The plan to identify effectiveness begins by determining the equilibrium price in the market. In this regard, the point of intersection of the demand and supply curves is the price in the market (Mahammed, 2014). The next step is to determine the increase in the cost of production of the company for every increase in unit output, which gives the marginal cost curve of the firm. After the marginal cost curve, one will need to determine the equilibrium price and quantity of the company. It is the intersection point of the marginal cost and revenue curve. Due to the constant selling price of the output the demand curve of the firm is also its average revenue and marginal revenue curve….

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Below are the calculations used to analyze the short run as well the long run functions using the provided equation

 Equations Provided

TC = 160,000,000 + 100Q + 0.0063212Q2
VC = 100Q + 0.0063212Q2
MC= 100 + 0.0126424Q

Quantity Demanded (QD) = Quantity Supplied (QS)

26770 – 42P =      -7909.89 + 79.0989P

Pe =     -34679.89    (According to Assignment 1)

121.0989    ……..

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