Explain the major short run and long cost functions

Reference no: EM131596107

Assignment: Operations Decision

Using the regression results and the other computations, determine the market structure in which the low-calorie frozen, microwavable food company operates.

Use the Internet to research two 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 page paper in which you:

1. Outline a plan that will assess the effectiveness of the market structure for the company's operations. Note: 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, determine two 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 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 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 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.

Reference no: EM131596107

Questions Cloud

Consequences of unethical or poor public stewardship : Write a 700- to 1,050-word paper outlining the critical need for public stewardship in budgeting. Detail the needs and methods for training public officials.

Summarize the hpt landscape model : In your view, what are the most important descriptors of HPT? Why? Further, summarize the HPT Landscape Model? How does it work?

What is the value if the interest is paid annually : what is the value of the bond? What is the value if the interest is paid annually?

Were your examples used as tools for social reform : An examination of the purpose of artwork created during the Great Depression. Were your examples used as tools for social reform?

Explain the major short run and long cost functions : Explain the major short run and long cost functions for the low-calorie, frozen microwaveable food company given the cost functions below.

Prepare a schedule of budgeted cash receipts for april : Jasper Company has sales on account and for cash Specifically 57% of its sales are on account and 43% are for cash. Prepare a schedule of budgeted cash receipts

Discuss passive misconduct involves failure : Prosecutions for homicides that arise out of "passive" misconduct have their own special problems. "Passive" misconduct involves failure to take action.

How is art a reflection of society : What image of America was communicated by the innovations and buildings presented at the 1883 Chicago's World Fair? How was this image communicated?

Review the case of gary leon ridgeway : Review the case of Gary Leon Ridgeway, the Green River Killer, on pages 32-33 of Eric W. Hickey's "Serial Murderers and their Victims" and write a 300-500 word.

User Account

All Pages