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Economic Principles Essay

1301 words - 6 pages

Economic Principles
Duane Sherry
university of phoenix
ECO
561
Karen Yancey
September 16, 2013

Economic Principles
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 ...view middle of the document...

Because it was the first of its kind, there was no immediate ceiling to its brand market share. With no ceiling in the immediate future, Tivo could charge a premium for their product. The product being introduced to the market will be one of the first of its kind being offered to a national and global market. .
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 willingness of consumers to pay for a product. The willingness for this product will come from the benefits the product offers over anything in the current marketplace. For example, the only way to use one’s television as a “monitor” is via a HDMI cable. Imagine being able to type a paper from the comfort of one’s couch without feeling the discomfort of a hot laptop on one’s lap or needing to strain one’s vision trying to stare at a 13” screen. The maximum willingness to purchase the product described will have a direct effect on the quantity supplied. The quantity supplied will have a directly proportional relationship to marginal cost and marginal revenue. According to McConnell, Brue, & Flynn (2009), once the minimal acceptable price of a given product covers the marginal cost, there will be revenue generated. Marginal revenue for a competitive seller will be consistently equal to the product price.
The organization’s nonpricing strategies will revolve around the benefits the product will offer compared to the current products in the marketplace. The current marketplace has products that do some of what this product will do or will do most of what this product will do but will require a HDMI cable to do it. The design of the product will distinguish it from the competition. According to McConnell, Brue, & Flynn (2009), by separating one’s product from the competition, one will have an advantage in...

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