Concept Of The Managerial Economics Essay Example

Market structure

The regression results show that the coefficient of determination is slightly above average. This implies that the model explains the demand for the product well. The elasticity for advertisement is positive. This shows that advertisement plays a slight role in the demand of the product. The two elasticties eliminate a monopoly and a perfectly competitive market because these market structures do not require advertisement to sell their products.

The cross price elasticity is above average. It implies that the demand of the commodity depends on the price of the competitive products. It also eliminates a monopoly market structure because the products sold by a monopoly firm lack close competitors. Thus, the market structure for the product is a monopolistic competition. In this market structure, there are a large number of firms that have some monopoly power. Also, the firms sell heterogeneous products that have close substitutes. Further, the product differentiation grants the firms some power over their pricing. Finally, there is a low barrier to entry into this market structure (Moon, 2013).

Effectiveness of market structure

In the previous assignment, the evaluation of the market was based on the assumption that the firm is operating in a perfectly competitive market. However, the discussion in the previous section shows that the firm is operating in a monopolistically competitive industry. Under perfect competition the equilibrium price and quantity was arrived by equating quantity demanded and supply. However, under monopolistically competitive industry, the firm will be able to set its own prices, thus it will not be a price taker.

Thus, the market structure will be effective for the company’s operations. This can be attributed to a number of factors. Over the years, there has been a significant increase in the microwavable food product in the market. This trend can be explained by the fact that they are convenient and require little time to prepare. The upsurge in microwavable food has also increased the popularity of microwaves.

Since the industry has significantly grown, consumers look for healthy options that have low calories and are rich in nutrients. In the low calorie microwavable food, the two top players are Lean Cuisine and Healthy Choice. A review of the industry shows that the market is divided based on psychographic, behavioral, and profile. Psychographic criteria group consumers based on their standard of living. Behavioral criteria classify the market based on the attitude of the consumer towards the product. Finally, segmentation on the basis of profile looks at attributes such as economic status and geographical locations among others (McGuigan, Moyer, & Harris, 2014).

Factors that would cause a change in market structure

As discussed above, the market structure of the company will change from a perfectly to monopolistically competitive market structure. This implies that the company will have some monopoly power. Specifically, it will have some level of control on prices. Under monopolistic competition, the company will be able to make some abnormal profits. This is based on the fact that the demand curve is downward sloping.

There are a number of factors that can cause the change in the market structure. The first significant factor is the ability of the company to differentiate its products. The second factor is the change in the disposable income of the target market. As discussed in assignment one, the product is quite responsive to changes in income. Thus, an increase in income will allow the company to successfully differentiate its products (McGuigan, Moyer, & Harris, 2014).

In the new market environment, the company needs to continue being innovative. In order to maintain the market share, the firm should produce commodities that keep them ahead of competition at all times. Thus, the cost of research and development is likely to go up under the new market structure. Another aspect of operation that can be affected by the change is pricing policy that is used by the company. Under the old market structure, the company was a price taker. However, in the new market structure, the company will need to change its prices depending on the market trends. To achieve this, the company should constantly monitor competition by looking at their prices, quantity produced and new products that they introduce in the market (Saada, 2009).

Cost functions

Analysis of short and long run cost functions

TC = 160,000,000 + 100Q + 0.0063212Q2s

Average Total Cost

ATC = TC / Q

ATC = (160,000,000/Q) + 100 + 0.0063212*Q

Total Fixed Cost

TFC = 160,000,000

Average Fixed Cost

AFC = TFC / Q

AFC = (160,000,000) /Q

Total Variable Cost

VC = 100Q + 0.0063212Q2

Average Variable Cost

AVC = TVC / Q

AVC = 100 + 0.0063212 * Q

Marginal Cost

MC = ΔTC / ΔQ

MC= 100 + 0.0126424Q

Suggestions

The cost structures for companies that operate in the Frozen food production industry highly depend on the size of the manufacturer, technology, and scale of operation. The information about the short and long run cost structures can help the company make a number of decisions. In the short run, the price of a monopolistic firm is greater than the marginal cost. Thus, the company can earn profits.

Further, the demand curve of the firm is downward sloping and there are limited barriers to entry and exit. Thus, in the short run, the abnormal profits will attract new firms in the industry. This will cause an increase in supply and a consequent decline in price. This explains the downward sloping demand curve. Thus, the company will experience a constant change in price and demand in the short run. In the long run, equilibrium is attained at the point where the difference between marginal revenue and marginal cost is zero. Thus, the profits are zero. In the long run, the prices should exceed the average total cost while in the short run the price charged should cover the average variable costs (McGuigan, Moyer, & Harris, 2014).

Discontinuation of operations

Generally, a firm is profitable if the price is greater than the average total cost. Profitability in the short run occurs if the price exceeds the average variable cost while in the long run it occurs if the price exceeds the average total cost. Thus, the firm should shut down if the price is lower than the average variable cost. Some of the factors that can cause average variable costs to exceed prices are inability to compete with other players in the market, lack of reliable suppliers, and lack of adequate funds (McGuigan, Moyer, & Harris, 2014).

One action that the management can take so as to stay in the business is to constantly monitor the actions of the competitors. The company should gather information on the prices and cost structures of the competitors. This will ensure that the prices set are competitive and allow the company to recover costs. Secondly, competitive methods should be used to evaluate and select suppliers. This will enable the company to pay reasonable and competitive prices for supplies.

The company needs to evaluate all the possible factors that can make average costs to exceed price. These factors need to be analyzed and feasible solutions should also be found before the firm reaches the point where it needs to shut down (McGuigan, Moyer, & Harris, 2014).

Pricing policy

Estimation of equilibrium values

Direct demand equation

Qd = 38,650 – 42P

Inverse demand function

P = (38,650 / 42) – (Q / 42)

P = 38,650 / 42 – Q/42

P = 920.238 – 0.238 Q

Total Revenue

TR = P *Q

TR = 920.238 Q – 0.238 Q2

Marginal Revenue

MR = ΔTR / ΔQ

MR = 920.238 – 0.476 Q

The general rule for profit maximization is that marginal revenue (MR) should be equal to marginal cost (MC) irrespective of the market structure.

MC= 100 + 0.0126424Q (from part 3 above)

MR = 920.238 – 0.476 Q

MR = MC

920.238 – 0.476 Q = 100 + 0.0126424Q

820.238 = 0.4886Q

Q = 1,679

P = 920.238 – 0.238 * 1,679

P = 521

A comparison of prices under the two market structures shows that the price under monopolistic market structure is higher than under perfect competition. This can be attributed to the fact that under perfect competition, there are no barriers to entry and exit. Therefore, the firms are price takers. However, under monopolistic competition, firms have some monopoly power and therefore they have control over prices.

This gives them more pricing options such as randomized pricing, and penetration pricing among others. The calculations in assignment one showed that the demand of the product is inelastic. Thus, the most suitable pricing policy that the company should use is marginal cost pricing. Under this strategy, the company is will add a mark-up to the direct cost of production. The mark-up added should guarantee that the price exceeds average variable costs in the short run and average total costs in the long run.

This will ensure that the firm is profitable both in the short and long run. It will also eliminate the possibility of shut down. This strategy is commonly used when a company is experiencing low sales and it is suitable because demand is quite sensitive to changes in prices (Mankiw, 2011).

Evaluating financial performance

The financial performance of the company will be evaluated by comparing the profit or loss that is generated both in the short and the long term. The calculations are presented below.

Short run

Old market structure

TC = 160,000,000 + 100Q + 0.0063212Q2

= $122,234

TR = 920.238 Q – 0.238 Q2

= $469,413

Profit = TR – TC

= $469,413 – $122,234

= $347,179

New Market structure

TC = 160,000,000 + 100Q + 0.0063212Q2

= 261,209

TR = 920.238 Q – 0.238 Q2

= 874,759

Profit = TR – TC

= 874,759 – 261,209

= $613,550

Average total cost = 156

Average fixed cost = 45

Average variable cost = 111

Marginal cost = 121

Long run

Profit = TR – TC

= 389,002 – 224,296

= $164,707

The calculations above show that the profit generated under the new market structure ($613,550) is higher than that under the old market structure ($469,413). This implies that the company is more profitable operating under monopolistic competition. Besides, the short term profit is higher than the long term profit. Further, it can be noted that the average variable cost and average fixed costs are lower than the price.

This shows that the company is profitable. The results of financial performance are quite significant in making managerial decisions. For instance, in the short run, the company can invest heavily on advertisement so as to improve the market share and increase sales. This can be attributed to the fact that the high profits that are generated in the short run will attract new firms and it will have an effect of reducing profits. However, intensified advertisement can enable the company to maintain this level of profitability. In the long run, the company has very little control over the prices. Therefore, it should focus on managing costs with an aim of sustaining the current level of profitability (Jain & Khanna, 2011).

Ways of improving profitability

One strategy that the company can use to increase profitability is through innovation. The frozen food industry is quite competitive and consumers are health conscious. Innovation can be achieved by analyzing market trends with an aim of responding to consumers’ needs. As a plan, the company can consider introducing gluten-free goods in their product line. The second strategy that the company can use is practicing price discrimination. As a plan, the company should divide its market based on the income level and offer their commodities at different prices in each of the market segments. These two strategies have a potential of increasing both the bottom line of the company and shareholders’ value (Hirschey, 2012).

References

Hirschey, M. (2012). Fundamentals of managerial economics. Mason, OH: South.

Jain, T. R., & Khanna, O. P. (2011). Business economics. New Delhi: V K Publications.

Mankiw, G. (2011). Principles of economics. Mason, OH: South-Western Cengage Learning.

McGuigan, J. R., Moyer, R. C., & Harris, F. H. deB. (2014). Managerial economics: applications, strategies and tactics (13th ed.). Stamford, CT: Cengage Learning.

Moon, M. (2013). Demand and supply integration: the key to world-class demand forecasting. New York, NY: Pearson Education Inc.

Saada, S. (2009). Elasticity: theory and application. New York, NY: Ross Publishing.

Ethical Health Informatics For HIV Patients

The Problems and Key Contributors

Overall, the situation can be described as a critical bottleneck that was affected by the inability of the stakeholders to reach an agreement. Therefore, it can be stated that the safety of patients with HIV was under pressure and there was no way to resolve this without a reasonable trade-off. Another issue that can be identified is the anxiety that might have grown in the patients with HIV that would be forced to register by means of the main computer. This problem was promoted by the decision to organize the system in a way that would only allow record the patient’s data in a non-private environment. This can be perceived as an unethical decision that was only supported by the minimization of the costs of the system.

Therefore, it is critical to address the problem of a relevant and effective trade-off. On a bigger scale, the efficiency of the information system within any given healthcare facility is important, but there is no way it should interfere with privacy concerns. It can be stated that there is no possibility for the executives to reach an adequate agreement that will justly resolve both the issue of privacy and the issue of the total implementation costs. Privacy concerns should never be inferior to the ultimate performance of the system, especially when it comes to patients with HIV (or any other ethically-marked illness).

Within the framework of this case study, ABCCHD is expected to encounter a number of complications connected to the expenditures connected to the security of the information system installed at the facility. The costs are projected to go over the top due to the fact that additional security measures require more monetary resources. As it was stated by one of the stakeholders, the efficiency of the system is also important, so this hints at the fact that they are more interested in performance. On the other hand, ABCCHD expose themselves to an increase in patient anxiety because they will not be able to register their data as they used to do it before.

Even though the trade-off between patient privacy and performance of the information system is not possible, the cost of the former still can be determined. In order to do that, we should take into account the time that will be spent on any given patient with HIV in case if they will have to update their records publicly. Therefore, the installation of a new information system that features an updated security mechanism should be included in the total costs of the enhancement (Murphy, 2015). Despite the performance of the system, we have to put patient safety at the forefront so as to spend more resources throughout the stage of installation but claim them back later by means of minimizing the nurse-patient interaction time.

The key players that are involved in the decision-making process are the hospital executives, ABCCHD developers, and the Board of Directors of Info-Health. These relationships are mitigated by patient privacy and the costs of the ultimate decision regarding the development of a new information system for the hospital. Within the framework of the current case study, it can be concluded that the current situation will impact Info-Health due to the fact that they will have to pay close attention to the development process so as not to miss out any critical points. The hospital will have to allocate extra monetary resources so as to cover the required expenses (Magnuson & Fu, 2014). Considering the situation at hand, the patients will win big and receive health care of a much higher quality while feeling (and being) protected.

One of the evident ways, in this case, is to spend extra resources on ensuring that the ethical issue of recording sensitive data within an unsafe environment is mitigated by the deployment of additional security measures. Consequently, this will positively affect the attitudes of patients with HIV toward health care practices at the given hospital. On the other hand, the hospital may decide not to spend any money on improving security. This will majorly contribute to the development of psychological issues and create indirect pressure on the group of interest.

The biggest contributor to the issue is the unwillingness of the stakeholders to reach an agreement. On a bigger scale, it can be seen that the third party (patients) does not win at all. The ethical side of this problem also makes patients inferior to the decisions that are made at a higher level. Overall, the dilemma cannot be resolved by means of any trade-offs and should be addressed from the patients’ side.

Short-term Warranted Actions

The trade-off between cost and privacy should be evaluated against several basic criteria. First of all, it is pivotal to take into account the number of patients with HIV whose records are stored at the hospital. The higher the number, the more chances that the trade-off has to be resolved in favor of the patients. Second, the management has to evaluate the available resources and make an informed decision on whether to spend additional resources on the development of a new information system or not (Hoyt & Yoshihashi, 2016). In perspective, this may be rather helpful to the other stakeholders as well because they will be able to assess the hospital’s possibilities and options.

The majority of the prior actions negatively influenced the situation on a number of different levels. This happened because an unbiased trade-off became unavailable. The stakeholders tried to preserve their interests instead of addressing the patients’ fundamental requirements. The alternatives that were suggested by the parties involved are adequate, but they will never allow any of them to reach an informed, unprejudiced decision. Considering the existing situation, it can be concluded that the ethical issue will not be resolved throughout a short period of time.

The very first thing that has to be done in order to repair the situation and adhere to the ethical guidelines is the creation of an additional security level. The latter will be added to the existing information system so as to ensure the patients’ safety. If we address this problem as soon as possible, we will be able to save big on software and hardware expenditures. The more the hospital extends the discussion, the fewer chances the stakeholders have to reach an agreement that will be beneficial for all the parties. At all times, patient health should be kept in mind.

Obviously, another aspect that has to be addressed is the performance of the system. Nonetheless, it should be repaired only after patient security is improved. The current situation hints at the fact that if we do not resolve the situation as soon as possible all the parties will be left behind – the stakeholders will lose a ton of money, and the patients will be exposed to the critical drawbacks of the existing information system and become dissatisfied with the overall quality of health care that is provided by the hospital (Harman & Cornelius, 2015). As it was mentioned above, a trade-off is not an option here, but the situation can be mitigated by a timely response.

On a short-term scale, the drawbacks can be mitigated by means of creating a list of patients that belong to the risk group. The access will be granted to a limited number of hospital employees that are not associated in any way with other stakeholders. The key goal here is not to disclose the information before bigger adjustments to the information system are made. We have to address the problem of patient safety from a number of perspectives so as to implement a long-term decision later. At this moment, the only option that is available to the hospital management is to grant access to the sensitive information only to a limited number of hospital workers.

Other warranted short-term actions may include leaving a note on the records of patients with HIV and treating the latter separately from other clients of the hospital. The first can be explained by the importance of treating these patients with extra cautiousness. The rationale for the second option is the specifics of the patients’ illness. They can be treated separately in order to protect them from becoming too anxious because of the sensitive information that can be accessed by other people. Overall, the proposed short-term solutions can be applied within the health care environment right away. The key advantage of these proposals is that they do not intend to interfere with the existing workflow and simply adjust it to the ethical side of the question.

Long-term Resolution

When we address the long-term resolution, we have to review three alternatives that can be proven useful within the framework of the evaluated case study. First, the hospital can implement a separate system so as to introduce there all the information concerning the patients with HIV. The core idea behind this system is that it will be a stand-alone application. In this case, it is advised to process the information at a separate front desk so as to detach HIV patients from other patient groups.

The advantage of this approach consists in the fact that the patients will feel safer and change their attitude toward client-provider relationships (Goodman, 2016). The disadvantage is that this option will not be available without separate software and hardware. In perspective, this alternative is expected to raise the costs of health care because a new person will be necessary to operate that computer.

The second alternative is to implement a new subsystem within the existing main system and introduce new privacy options. By doing this, the hospital will be able to maintain the security of the patients’ records. If the hospital decides to implement this, they will have to make sure that additional software is in place so as to ensure that privacy is maintained and security is warranted. In this case, a separate front desk is still necessary to register the patients with HIV.

The biggest advantage of this option is that supplementary hardware is not required and the hospital will not have to spend the majority of their monetary resources on the information system. At the same time, the disadvantage is that the system may be breached and all the sensitive info will be retrieved by either wrongdoers or those individuals who were not intended to have access to it.

The third alternative is to deploy the new registration system directly in the existing system. The only difference is that it will have to be a built-in feature that cannot be separated from the information system. The registration of all patients will occur at the same desk. All the privacy features will be included by default. The biggest advantage of this approach is that it does not require extra operational expenditures and can be implemented on the spot. The disadvantage, at the same time, is that all the patients will be served at the same place and the patients with HIV may become anxious and develop numerous covert fears that may have an adverse impact on their overall condition.

The five-year solution can be perceived as a way to translate the short-term activities into a long-term resolution. The current situation can be efficiently addressed only when all the ethical implications are considered. The five-year solution will be focused on developing an extra system that will be used to record the data regarding HIV patients. This will be done in order to align the deployment of the information system with the ethical norms of health care.

Positive long-term outcomes can be achieved only when the system is patient-centered. Therefore, all the future incentives should revolve around making the patients’ lives easier instead of concentrating on monetary profits and increased hardware/ software performance.

References

Goodman, K. (2016). Ethics, medicine, and information technology: Intelligent machines and the transformation of health care. New York, NY: Cambridge University Press.

Harman, L. B., & Cornelius, F. H. (2015). Ethical health informatics: Challenges and opportunities. Burlington, MA: Jones & Bartlett Learning.

Hoyt, R. E., & Yoshihashi, A. (2016). Health informatics: Practical guide for healthcare and information technology professionals: sixth edition supplement. Raleigh, NC: Lulu.

Magnuson, J. A., & Fu, P. C. (2014). Public health informatics and information systems. London, UK: Springer.

Murphy, S. P. (2015). Healthcare information security and privacy. New York, NY: McGraw-Hill Education.

Ultrasound Technology And Intravenous Access Quality

The research question is how the implementation of ultrasound technology may affect the quality of intravenous (IV) access in patients at the given hospital. The objective of the potential research is to explore the association between multiple IV attempts and vascular ultrasound technology. To conduct the study, it is appropriate to apply the qualitative method of research. According to Munhall (2012), “qualitative research seeks new possibilities, frees us from the bonds of biases, and searches for the significance of being” (p. 29). This type of research helps to obtain attitudes and perceptions of respondents that, in their turn, eliminate the possibility of biased results. Besides, the qualitative study uncovers trends and detects the specifics of the current situation, thus providing essential insights regarding the problem.

The method of the prospective observational study will be selected due to its comparative nature. Among the key strengths of this method, one may note that it focuses on the outcomes rather than causes of the problem. It is advantageous when there is a need to discover real-life situations and explore their meaning (Blaivas & Adhikari, 2014). The results of observational studies are explanatory and promote an in-depth understanding of the issue. It is beneficial to use the mentioned type of research when an interview or survey is inappropriate. However, some disadvantages involve time-consuming and excessive subjectivity. For example, some studies may last for years or be significantly affected by the role of a researcher. Conducting research, it is of great importance to prevent any impact on its course to keep the validity of results high. Moreover, ethical considerations present another potential weakness. The observational study may be difficult to conduct in some situations when the respondents are confused, aggressive, and so on. Ultimately, the necessity to report the findings of the study may cause some ambiguity.

Considering the goal of this research, it is possible to assume that the mixed method design may benefit the credibility and visibility of findings. It may be suggested to collect the qualitative data and then support it with the survey, utilizing a 10-point Likert scale to assess IV periods, durability, and other indicators. Creswell (2014) considers that it is better to use “the two forms of data that should be integrated into the design through merging the data, connecting the data, or embedding the data” (p. 217). The core advantage of this type of research is that qualitative data is supported by qualitative indicators or vice versa. The strength can also be added due to the elimination of weak points of the two methods (Reaves, Ginsburg, Bang, & Fleming, 2015). In particular, the mixed method establishes a balance between objectivity and subjectivity, thus leading to a comprehensive vision and interpretation of the situation. For example, the article by Osborn, Borhart, and Antonis (2012) integrates both qualitative and quantitative methods, namely, a survey and randomized controlled trial.

It also seems essential to pinpoint the fact that the mixed method approach is associated with some challenges. It can be too complicated to be conducted due to plenty of requirements. In particular, it takes a lot of time and resources. In case discrepancies occur, it may be quite difficult to explain and address them, focusing on both methods. Thus, the mixed-method research requires thorough planning and collection of resources as well as attention to details.

References

Blaivas, M., & Adhikari, S. (2014). Emergency medicine: An issue of ultrasound clinics. Philadelphia, PA: Elsevier.

Creswell, J. W. (2014). Research design (4th ed.). Thousand Oaks, CA: Sage Publications.

Munhall, P. L. (2012). Nursing research: A qualitative perspective (5th ed.). Sudbury, MA: Jones & Bartlett Learning.

Reaves, D. K., Ginsburg, E., Bang, J. J., & Fleming, J. M. (2015). Persistent organic pollutants and obesity: Are they potential mechanisms for breast cancer promotion? Endocrine Related Cancer, 22(2), 69-86.

Osborn, S. R., Borhart, J., & Antonis, M. S. (2012). Medical students benefit from the use of ultrasound when learning peripheral IV techniques. Critical Ultrasound Journal, 4(1), 1-3.