ECO 550 Week 6 Assignment "Operations Decision"

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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

  1. 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.)
  2. 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.)
  1. 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.)
  1. 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.
  2. 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.

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.

Must be original text

Tutor Answer

wambuiguama
School: Boston College

Hello! I have uploaded the answer to this question. Please have a look at it and get back to me in case of anything. Thank you.

Running head: OPERATIONS DECISIONS

1

Operations Decisions
Name
Institution
Date

OPERATIONS DECISIONS

2
Operations Decisions

There is an extreme request for microwavable food alternatives, and several competitive
brands try to quench that thirst in the current food service market. If we balance people way of
living with several generations’ we will discover a significant variation. Currently, customers are
enlightened, more tech-aligned, more competitive, and have better incomes than before. These
aspects are useful in raising the standard living and force conventional trend cooking mechanism
outdated. As more and more individual is overweight, a low-calorie food is imperative in
diminishing weight about five pounds weekly. Because of these advantages, a lot of institutions
are issuing meals with low calories. The two organizations take consideration of Adkins and
Lean Cuisine (Browning & Zupan, 2011).
From the item issued in Assignment 1 a statistical element has been applied; that is
deterioration assessment has been carried out to approximate to require operation of a
microwavable food that has low calories. The deterioration equation derived as follow:
QD = -2,000 - 100P + 15A + 25PX + 10 I
Se = (5.234) (2.29) (525) (1.75)

(1.5)

R2= .85 n = 120 F = 35.25
The worth of R2 is extreme, which depicts that autonomous adjustments applied in the
recession equation are impacting differentiation in need of microwavable foods. The variable to
be utilized in recession equation comprise of per-capita income, pricing, the value of free goods,
and advertising. The task has also issued for flexible amounts. For instance, the promotion
flexibility is 0.21 which depicts that purchasers react to promotions and it is one of the critical
adjustments that influence request of low calories foods. Currently, as we realize, any institution

OPERATIONS DECISIONS

3

lies in one of the four groups of business framework this takes consideration of monopoly,
monopolistic rivalry, oligopoly, and lastly perfect competition.
The whole rivalry is a marketplace where there are last figures of same consumers and
vendors of the particular merchandise. They all are price takers and therefore can influen...

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Anonymous
Thanks, good work

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