Market Structures Simulation
Simulation exercise regarding the company – Quasar who manufactures the “Neutron” Computer. The company was granted a three year monopoly due to its’ patented rights in the year 2003 (University of Phoenix, 2009). The Four market models/structures that the learning team is expressing knowledge of are: Pure Competition, Pure Monopoly, Monopolistic Competition and Oligopoly. The strategic variables that helped Quasar Computers to make a profit and keep the many In business throughout the life of the company were based on different variables.
Quasar Is a thriving company who has decided to put a price on the “Neutron” computer. With Quasar being a monopoly which is describes as: a company who corners the market by being the only seller of the product by blocking the entry of other companies/possible competitors. Product differentiation is not a problem because there are no other companies to compete with. (McConnell, (2009). The MAC = MR. rule would be the best strategy for Quasar in deciding on a price that ill prove to be profitable. According to the simulation the price of $2,550 Is where profit equals 1 29 billion.
The best way to promote the product Is through advertising. The most reasonable advertising budget would be $400
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The simulation take readers through the process of a monopoly company whose unlimited profits and resources began to spiral downward due to production efficiency and the patent is nearing expiration. That means the price must be lowered in order to attract consumers and an investment must be made to upgrade the product. Increasing the price would only add more problems in terms of profit gaining, therefore, the best solutions would be to lower the price of the “Neutron” imputer.