Outline a plan that will allow you to identify the market structure in which your company now operates.

Use the updated demand (Q_D) 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 changed and is now:

QD = 350,000 -100 P

This function generates the following Marginal Revenue Function (MR):

MR = 3500-0.02Q

 

Write a six to eight (6-8) page paper in which you:

1.  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 and therefore the equilibrium price would be determined by setting demand equal to supply, or QD = QS. Changes in the market  now suggest it is imperfectly competitive and that your firm has substantial market power to set its own “optimal” price.

2.  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.

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 you may use this information to make production decisions in the short-run and the long-run.