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..

Reviews

Write a Review

 

Business Economics Questions & Answers

  Formulate an lp model for this problem

Bill’s Grill is a popular college restaurant that is famous for its hamburgers. The owner of the restaurant, Bill, mixes fresh ground beef and pork with a secret ingredient to make delicious quarter-pound hamburgers that are advertised as having no m..

  What circumstances would bob be likely to buy bonds

A month later, Bob buys a $1000 government bond from the Fed with this money. A) What happens to the money supply (M1)? Does it increase or decrease? By how much? The money supply decreases by $1000. B) How would this impact Bob's future spending? Un..

  Should the antitrust authorities stop more corporate mergers

Should the antitrust authorities stop more corporate mergers  than they currently do? What are some of the pros and cons?

  Coefficient of cross-price elasticity of demand

Suppose the price elasticity of demand for bread is 1.00. If the price of bread falls by 20%, the quantity demanded will increase by: Suppose that a 20% decrease in the price of good Y causes a 20% increase in demand for good X. The coefficient of cr..

  Cost of the owner time to run the plumbing business

Water Works Plumbing Company is a small owner-managed plumbing services company that serves the greater Miami metropolitan area. Identify each of the following costs as either a vari­able, a fixed, or a quasi-fixed cost: Cost of the owner’s time to r..

  Consumption in order to increase her total utility

Tom consumes positive quantities of both jam and juice. the price of jam is 5 cents per unit and the price of juice is 10 cents per unit. Her marginal utility of jam is 10 and her marginal utility of juice is 55. Without changing her total expenditur..

  Velocity and output are constant and that quantity theory

Suppose that velocity and output are constant and that the quantity theory and Fischer effect are both correct. If the nominal interest rate is 8 percent and inflation is 3 percent, what is the money supply growth rate or the real interest rate? a)th..

  Difference using the concept of price elasticity of demand

The Disney Company regularly offers coupons good for discounted admissions into its amusement parks. However, they never offer any discounts on merchandise inside the parks (food; souvenirs; etc.). How can you explain this difference using the concep..

  How much is the first payment

Suppose that, at the last minute, the company decides to purchase the same machinery at the same rate (8 percent), with payments decreasing by $7,500 each year. How much is the first payment?

  Explain how much could the money supply expand

First National Bank receives a deposit of $5,400. If there is no slippage, explain how much could the money supply expand.

  What differences among productive and allocative efficiency

What are the differences among productive and allocative efficiency. What conditions must be present for productive and allocative efficiency to be achieved in the 'real' world.

  Describe how the circular-flow diagram works

Describe how the circular-flow diagram works. Name the parts of the diagram that correspond to the flow of goods and services if you were to pay $50 for a new pair of shoes at a local shop. Name the parts of the circular-flow diagram that correspond ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd