Assignment 2: Operations Decision

04/23/14
Joel Chagadama
Dr. Bernadette West
Eco 550

The purpose of this paper is to present the low-calorie microwaveable foods’ in support of the company’s long run operations decision plans. In the paper, I will examining the results of the new supply curve as it reflects to the current market structure and then take into account the expected changes to the selling environment and factors that may have caused the change. I will also examine chief short-run and long-run production and cost functions as applied to this new cost data to determine if there are conditions under which operations could be discontinued. Given the change in the market structure they we be a need to review the …show more content…
An oligopoly selling environment is a competitive market structure with moderately small numbers of businesses offering comparable products or services (McGuigan, Moyer & Harris, 2014). The key cause of the market structure as pointed out by Slack & Lewis are withdrawal of a competitor and a major increase or decrease in the price of products (2003). The above changes influence business operations in various ways. For instance, there will be increased output since the market share increases resulting in an increase to cost of operations, with notable increases affecting elements such as labor, and advertisement costs. It is probable that labor costs will decrease in the long run as the firm’s control of new companies is solidified and redundant positions are deleted. The above changes may also require the company to upgrade its operations and embrace the use of modern technology in its operations (Bragg, 2012).
3. Short and long-run production and cost functions for the frozen, low-calorie microwaveable food company.

TC = 160,000,000 + 100Q + 0.0063212Q2
VC = 100Q + 0.0063212Q2
MC= 100 + 0.0126424Q

From assignment 1 QD = 350,000 -100 P QS = -7909.89 + 79.0989P
ATC = TC/Q = (160,000,000/Q) + (100Q + 0.0063212Q2)/Q = (160,000,000/Q) + 100 + 0.0063212Q
AFC = 160, 000, 000/Q
AVC = 100 + 0.0063212Q
To find the level of output that would minimize the average total cost, we have to equate the average total cost to