Assignment 2: Operations DecisionDue Week 6 and worth 300 pointsUsing the regression results and the other computations from Assignment 1, determine the marketstructure 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, microwavablefood industry, and take note of their pricing strategies, profitability, and their relationships within theindustry (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’soperations. Note: In Assignment 1, the assumption was that the market structure [or sellingenvironment] was perfectly competitive and that the equilibrium price was to be determined bysetting QD equal to QS. You are now aware of recent changes in the selling environment thatsuggest an imperfectly competitive market where your firm now has substantial market power insetting its own “optimal” price.2. Given that business operations have changed from the market structure specified in the originalscenario 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 thenew market environment.3. Analyze the major short run and long cost functions for the low-calorie, frozen microwaveablefood company given the cost functions below. Suggest substantive ways in which the low-caloriefood company may use this information in order to make decisions in both the short-run and thelong-run.TC = 160,000,000 + 100Q + 0.0063212Q2VC = 100Q + 0.0063212Q2MC= 100 + 0.0126424Q4. 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 costsin the short run and average total costs in the long run to continue operations.)5. Suggest one (1) pricing policy that will enable your low-calorie, frozen microwavable foodcompany to maximize profits. Provide a rationale for your suggestion.(Hints:• In Assignment 1, you determined your firm’s market demand equation. Now you need tofind the inverse demand equation. Having found that, find the Total Revenue function foryour firm (TR is P x Q). From your firm’s Total Revenue function, then find your MarginalRevenue (MR) function.• Use the profit maximization rule MR = MC to determine your optimal price and optimaloutput level now that you have market power. Compare these values with the values yougenerated 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 usein order to evaluate its financial performance. Consider all the key drivers of performance, suchas company profit or loss for both the short term and long term, and the fundamental manner inwhich each factor influences managerial decisions.(Hints:• Calculate profit in the short run by using the price and output levels you generated in part5. Optional: You may want to compare this to what profit would have been in Assignment1 using the cost function provided here.• Calculate profit in the long run by using the output level you generated in part 5 and costdata 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 (2) actions that the company could take in order to improve its profitability anddeliver more value to its stakeholders. Outline, in brief, a plan to implement yourrecommendations.8. Use at least five (5) quality academic resources in this assignment. Note: Wikipedia does notqualify 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 allsides; citations and references must follow APA or school-specific format. Check with yourprofessor for any additional instructions.• Include a cover page containing the title of the assignment, the student’s name, the professor’sname, the course title, and the date. The cover page and the reference page are not included inthe 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 affecteconomic growth, inflation, interest rates, and wage rates.• Evaluate the profit-maximizing price and output level for given operating costs for monopolies andfirms in competitive industries.• Use technology and information resources to research issues in managerial economics andglobalization.• Write clearly and concisely about managerial economics and globalization using proper writingmechanics.
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