Managerial Economics Research Paper Example | Topics and Well Written Essays - 750 words

Managerial Economics - search Paper ExampleThe cost of production is dependent on the materials the hards choose. In this case the building materials are the materials for production. It is to be noted that the solid is earning short run profits which are the driver of new firms into the mart. As new firms enter into the commercialize, the demand for the materials for production will rise. The chosen firm will also pitch to buy the materials at higher costs and therefore, the costs of production will rise (United Nations Department of Agriculture, n.d.). b) The equipment casualty that the chosen firm charges for their services will depend on two major factors the disceptation that the firm faces from other competitors and the real estate market. As there is entry of new firms into the market, there is improver competition which will tend to force the equilibrium price down. Therefore, the chosen firm will be strained to charge less for the remodeling services. c) From the a bove two discussions it is clear that the firm will have to face increased competition and the costs of production will also increase. When new entrants appear in the market, the share of all(prenominal) of the other firms operating within the same industry decreases. As a result, the profits of the chosen firm will decrease. The firm will now enjoy only normal profits. Managerial Decisions for Firms with Market situation 2. ... How? What evidence might you bring to the hearing? Answer The Federal Trade Commission is concerned that the merger increased the market force-out for the firms that merged. However, it is difficult to argue that the market power will not increase if it is assumed that the rivals are close to the size of the merged firms. But it domiciliate be argued that the merger was precisely aimed to save costs. Suppose the individual firms had to incur some overhead costs while operating as individual units. If it can be argued that increasing market power was no t the aim of the merger and if it can be proved that the overhead costs have really decreased while operating as a merged company, then it will provide a foothold in the argument. The concentration of market power will also help to derive the price elasticity of demand. It can also be argued that the market power will not increase as much as in a situation of monopoly and would lack the power to hurt the consumers. In an industry characterized by firms that enjoy similar market shares, it is unlikely that the market power will increase as a result of the merger. The search locomotive engine market power tremendously increased because of the deal between Microsoft and Yahoo. The deal was allowed as Google enjoyed a sensible power of the market. If the deal would not have taken place, both companies would have began to lose market power which could have hurt the consumers. Strategic Decision Making in Oligopoly Market 3. When McDonalds Corp rock-bottom the price of its Big Mac by 7 5 percent if customers also purchased French fries and a soft drink, The Wall Street Journal reported that the company was hoping the novel promotion would revive its U.S. gross revenue growth. It didnt. Within two weeks sales had fallen. Using your knowledge of game theory,