Economic Principles Essay
Duane Sherry university of phoenix
September 16, 2013
This paper will apply the economic principles presented in weeks one through three. An economic analysis of a unit that projects what is on one’s laptop onto a television screen via wifi or blue tooth and allows the user to in effect use their television screen as their monitor will be proposed. Statements about market structure and the elasticity of demand for the product will be covered. Hypothetical data, based on similar real world products to estimate fixed and variable costs will be presented.
According to Wang and Zheng (2012), the relationship between the market structure’s distinctions and production …show more content…
Due to being one of the first of its kind, the organization can charge a higher price with the first offering and possibly lower the pricing for older models, as newer models are created and sold in the marketplace. According to McConnell, Brue, & Flynn (2009), the laws of demand states, with all factors being equal, a consumer will more than likely by more of a given product as its price declines versus purchasing a product whose price is increasing. This will work for the product described, as long as there is always a next generation of the product readily available every year to two years.
According to McConnell, Brue, & Flynn (2009), if consumers’ sense of brand loyalty trends towards the high side, a firm’s potential revenue will continue to rise. The elastic demand of the product is elastic because if the organization were to decrease their pricing, there would be a higher demand for the product. The elasticity of the product will be perfectly elastic, if the above holds true.
With the above in mind, changes in the quantity supplied as a result of the organization’s pricing decisions will affect marginal cost and marginal revenue. The organization must be able to capitalize on the maximum