Use the updated demand and marginal revenue function

Assignment Help Business Economics

Reference no: EM131161190

Use the updated demand (QD) and marginal revenue (MR) functions below to complete this assignment. Due to changes in the low calorie, frozen, microwavable industry’s market structure, the firm-specific demand equation for our hypothetical company has shifted outward and is now: QD = 350,000 - 100 P This function generates the following Marginal Revenue Function (MR): MR = 3500-0.02Q Outline a plan that will allow you to identify the market structure in which your company now operates. Comment on the relevant elasticity results from Assignment 1 and your research into two (2) of leading competitors in this industry, taking note of their pricing strategies, profitability, and their relationships within the industry (worldwide). Note: In Assignment 1, the assumption was that the market structure was perfectly competitive. Changes in the market now suggest it is imperfectly competitive and that your firm now has substantial market power to set its own “optimal” price. Imagine that you work for the maker of a leading brand of low-calorie, frozen microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April. Note: The following is a regression equation. Standard errors are in parentheses. QD = -3,750 - 100P + 25A + 50PX + 8Y (5,234) (2.29) (525) (1.75) (1.5) R2 = 0.90 n = 26 F = 35.25 Your supervisor has asked you to compute the elasticities for each independent variable. Assume the following values for the independent variables: QD = Quantity demanded of a unit (dependent variable) P (in cents) = 300 cents per unit (price per unit) PX (in cents) = 200 cents per unit (price of leading competitor’s product) Y (in dollars) = $10,000 (per capita income in the Standard Metropolitan Statistical Area (SMSA) where the 26 supermarkets are located) A (in dollars) = $750 (monthly advertising expenditures) Example of Assignment 1 that is referenced in this question: Imagine that you work for the maker of a leading brand of low-calorie, frozen microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April. Note: The following is a regression equation. Standard errors are in parentheses. QD = -3,750 - 100P + 25A + 50PX + 8Y (5,234) (2.29) (525) (1.75) (1.5) R2 = 0.90 n = 26 F = 35.25 Your supervisor has asked you to compute the elasticities for each independent variable. Assume the following values for the independent variables: QD = Quantity demanded of a unit (dependent variable) P (in cents) = 300 cents per unit (price per unit) PX (in cents) = 200 cents per unit (price of leading competitor’s product) Y (in dollars) = $10,000 (per capita income in the Standard Metropolitan Statistical Area (SMSA) where the 26 supermarkets are located) A (in dollars) = $750 (monthly advertising expenditures) This is the second part to the first question Given that the market structure has changed from the original scenario in Assignment 1, determine at least 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.

Reference no: EM131161190

Questions Cloud

Inputs is derived from the market demand function : Derived demand is directly determined by the profitability of using inputs to produce output. The demand for inputs is derived from the market demand function. With inelastic demand, aprice increase produces lower marginal and total revenue. Two prod..

Under pressure from the sugar lobby-consumption of sugar : Under pressure from the sugar lobby, which feared a flood of sugar entering through Mexico, the U.S. Congress demanded limits on the amount of sugar that Mexico could export to the U.S. as a condition for passing the North American Free Trade Agreeme..

Groups of people will be considered as? unemployed : Which of the following groups of people will be considered as? unemployed?

Use the updated demand and marginal revenue function : Use the updated demand (QD) and marginal revenue (MR) functions below to complete this assignment. Due to changes in the low calorie, frozen, microwavable industry’s market structure, the firm-specific demand equation for our hypothetical company has..

Discusses an oligopolistic industry : Find a recent news article that discusses an oligopolistic industry in the U.S. Provide a usable link to the article (3 points by itself) and a summary of what the author is discussing.

What will be the effects on the positions of the mp curve : Consider an economy characterized by the following: C = $3.5 trillion I = $1.8 trillion G = $2 trillion T = $2 trillion NX = -$1 trillion mpc = .75 d = 10 x=5 λ=1 r = .01 f =.01 A. Derive mathematical expressions (based on the given parameter values)..

What is the total debt of government equal to at end year : At the beginning of 2009, a government had a total debt of $540 billion dollars. It ended 2009 with a $6 billion dollar budget surplus. In 2010, its budget surplus reached $8 billion dollars. What is the total debt of the government equal to at the e..

What is the opportunity cost of saving the money : Suppose a household can buy a new jet ski for $2,000 or they can save this money and earn 6% annual interest (assume these are the only choices they are considering with this money). What is the opportunity cost of buying the jet ski? What is the opp..

User Account

All Pages