Assignment 2: operations decision | Business & Finance homework help
The low-calorie frozen, microwavable food company operates in a monopolistically competitive market structure. In this type of market structure, there are many firms that produce similar but differentiated products. These firms have some control over their prices because each firm has a unique product and consumers may be willing to pay different prices for different brands of the same product.
In a monopolistically competitive market structure, entry and exit are relatively easy compared to other types of markets such as monopoly or oligopoly. This makes it easier for new low-calorie frozen food companies to enter the industry and compete with existing players. Additionally, due to its large number of competitors all striving for customer loyalty, firms in this market tend to engage in non-price competition such as advertising campaigns, promotional activities, and quality improvements in order to differentiate themselves from their rivals.
This type of market structure also allows firms substantial control over their short-term price planning since each firm faces downward-sloping demand curves – meaning that an increase in price will lead to fewer customers buying the product. However, these firms do not have complete control over prices since they must remain close enough on pricing so as not lose too much business relative to other companies who offer similar products at lower prices. This means that although each firm can set its own price (upwards or downwards), if one firm raises its price then it will likely cause all other firms in the industry to raise theirs too – albeit by smaller amounts – so as not lose customers through being uncompetitively priced compared with rival offerings.
Overall, the low calorie frozen food company operates within a monopolistically competitive market where there is considerable competition between rival producers offering similar but differentiated products and services; where there is relative ease of entry and exit; where each company has some degree of control over pricing decisions; and where non-price competition is quite common amongst competing players.