Economics for managerial decision making: Market structure
Charles Brown Jr
ECO/561
October 04, 2010
Frank Kingsland

Economics for Managerial Decision Making: Market Structures

Basis for the case study
Each of the four cycles in this simulation relates specifically to the four market structures — monopoly, oligopoly, imperfect competition, and perfect competition. The learner plays the role of the newly appointed Chief Executive Officer of Quasar. As the CEO, the learner will approve decisions on the pricing of Neutron based on the cost and revenue structures for each market structure that Quasar transitions through. Cycle 1 – 2003 - Monopoly
In this cycle, Quasar Computers introduces Neutron, the world's first all-optical portable notebook computer. This cycle is divided into three steps, each of which requires the learner to take a decision that will increase the profits for the firm. Decision points
Step 1 - The price at which Neutron should be introduced to the market is ___2550_____?
Step 2 - The advertising budget to be allocated and the price for Neutron is ____2,450___?
Step 3 - The amount to be invested on internal processes improvements and the price for Neutron is _2200_____? Discussion question
In spite of being a price-setter (a company that can set its own price), why would a monopoly player choose to pursue cost reduction and demand stimulation strategies? They would pursue a cost reduction and demand stimulation strategy by increasing profit because the ATC would be reduced. Cycle 2 – 2006 - Oligopoly
In this cycle, the learner is faced with another entrant in the optical notebook computer market, Orion Computers, which has captured 50% of the market share. The objective for the learner is to stabilize the market price at which Quasar makes the maximum profit. Decision points
The learner needs to decide