ECO 550 Assignment 3
Long-Term Investment Decisions
Strayer University
Keryl W. Gasque
Professor: Muhammad
ECO 550 Managerial Economics and Globalization
June 8, 2014
Outline a plan that managers in the low-calorie, frozen microwaveable food company could follow in anticipation of raising prices when selecting pricing strategies for making their products response to a change in price less elastic. Provide a rationale for your response.
A low calorie or healthy option food is a fresh concept which has gained a lot of interest in today’s times. Restaurants, schools, and even prisons are feeding healthier. More people want to be healthy and live healthier lifestyles. This paper will outline a plan for managers anticipating rising prices, examine the major effects the government have on production and employment, determine whether government regulations ensure fairness, examine the major complexities under expansion via capital projects, and lastly suggest how a company could create convergence between the interests of stock holders and managers.
The Company aims to keep the prices of its products as inelastic as possible. This means that the pricing strategy should have no impact on the way the consumers perceive and buy such products (Definition of Inelastic, (n.d.)). Generally we see such demand only in situations in which the good or services are indispensable and the consumers cannot do without the product. This is not the case for microwavable food products. The demand function for low calorie microwavable foods largely depends on the price of the merchandise, its relative (substitute) product, advertisement overheads and last but not the least on the income of the consumer.
From the demand function and the elasticity considered, it is established that the market for the low calorie microwavable foods fit into a market of monopolistically competitive type. A monopolistic competitive is distinguished by a reasonable number of buyers and sellers. As a
Strayer University
Keryl W. Gasque
Professor: Muhammad
ECO 550 Managerial Economics and Globalization
June 8, 2014
Outline a plan that managers in the low-calorie, frozen microwaveable food company could follow in anticipation of raising prices when selecting pricing strategies for making their products response to a change in price less elastic. Provide a rationale for your response.
A low calorie or healthy option food is a fresh concept which has gained a lot of interest in today’s times. Restaurants, schools, and even prisons are feeding healthier. More people want to be healthy and live healthier lifestyles. This paper will outline a plan for managers anticipating rising prices, examine the major effects the government have on production and employment, determine whether government regulations ensure fairness, examine the major complexities under expansion via capital projects, and lastly suggest how a company could create convergence between the interests of stock holders and managers.
The Company aims to keep the prices of its products as inelastic as possible. This means that the pricing strategy should have no impact on the way the consumers perceive and buy such products (Definition of Inelastic, (n.d.)). Generally we see such demand only in situations in which the good or services are indispensable and the consumers cannot do without the product. This is not the case for microwavable food products. The demand function for low calorie microwavable foods largely depends on the price of the merchandise, its relative (substitute) product, advertisement overheads and last but not the least on the income of the consumer.
From the demand function and the elasticity considered, it is established that the market for the low calorie microwavable foods fit into a market of monopolistically competitive type. A monopolistic competitive is distinguished by a reasonable number of buyers and sellers. As a
References: Lin, J. (2004). US buys Chinese goods and smog. (2014). New Scientist, 221(2953), 6. Kleinschmidt, J. (2008, December). The benefits of entering the global marketplace. Retrieved September 2, 2013, from Specialty Fabrics Review: http://specialtyfabricsreview.com/articles/1208_f2_global.html Managerial- economics strategies. (n.d.). Retrieved from http://www.ehow.com/info_7884923_managerial-economics-strategies.html#ixzz2XrHowXtR McGuigan, J. R., Moyer, R., & Harris, F. (2011). Managerial economics: Applications, strategy and tactics (12 ed.). Mason: South- Western Cengage Learning. O 'Sullivan, A., & Sheffrin, S. M. (2006). Economics: Principles & tools. Upper Saddle River: Pearson Education Inc. Thottam, J. (2004). CAN THIS MAN SAVE TYCO?. Time, 163(6), 48-50. Xie, J. (2010). Board governance and managerial short-term incentives. Management Science & Engineering