Investment decisions

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Investment decisions: Low Calorie Microwavable food Course name: Course no. Date: Instructor’s name: The demand function for low calorie microwavable food depends on the price of the good, its competitive good, advertisement expenditure and income of the consumer. From the demand function and the elasticities calculated, it is found that the market for the low calorie microwavable food belongs to a monopolistically competitive market. A monopolistic competitive is characterized by a fair number of buyers and sellers. Therefore people can switch to another brand if a particular brand charges a high price. But a monopolistic competitive seller performs product differentiation. Thus he attracts the…show more content…
They are: Mergers and acquisitions Giving franchise ownership to other organizations Patent of intellectual property Use of distributors and dealers for marketing Adoption of new marketing strategies Forming cooperatives to minimize cost of operation, e.g. advertising and purchasing costs Public stock offerings Offering stock to its own employees In the short run, the firm can only change its variable input to change its output and profitability. In the long run, the company can indulge in R&D to reduce the cost of production. If it can innovate any cost effective method of production, then the firm can enjoy a cost advantage over the other firms. But if the price falls below the marginal cost, then the firm will incur losses and it will discontinue its production. In the long run, the lowest point of the average cost curve denotes the break even point. If the price falls below that the firm will shut down. In the long run, the firm can change all its inputs to change its output. Therefore the firm can change its capital to change the output. In other words, the company can expand via capital projects. A capital project is a project that needs a huge amount of cash to build and grow an asset. In some cases, acquisition of new assets is also termed as capital projects. Building of new warehouses by companies, or purchase new manufacturing equipment to increase efficiency on the line. But expansion via capital projects has several limitations also.
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