Eco 550 Assignment 2 Operations Decision

Assignment 2 Operations Decision Name Tutors Name 05/02/2017 This paper is for reference purpose only do not submit it to your school If you need a custom paper, one you can Submit, Please contact us www.allessayservices.com Outline a plan that will assess the effectiveness of the market structure for the companys operations. Under perfect competition QD equal to QS where QS5,20045P therefore P-5,200/45Q/45 And QD211,000-10P therefore P21,100-0.10Q If QD equal to QS then -5,200/45Q/45 21,100-0.10Q solving Q/45-5200/4521,100-0.10Q 5.5/45Q21,1005,200/45 5.5Q954,700 Q 173,581.82 round to 173,582 Inserting Q into the price equation P21,100-0.10Q P21,100-17,3583,742 Under perfect competition the equilibrium price is 3,742 and equilibrium quantity is 173,582 units With the changes in the selling environment, the company now operates in a monopolistic competition. A feature of monopolistic competition is that each firm has substantial market power to determine price but is not the only supplier in the market. Since the goal is profit maximization, the company will continue producing until the extra revenue (marginal revenue) from sales is equal to the extra cost of production (marginal cost). Therefor the most effective level of operations in this market structure in the short run is when Marginal revenue equals marginal cost (MR-MC). In the