Eco 561
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- Date Submitted: 10/19/2011 11:52 AM
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Business Proposal
Overview
The Will Bury Scenario, provided by University of Phoenix online discusses Will Bury as an inventor who has created and patented a new product to transform printed words as in books or text materials into a digital or audio product. However, doing some extended research, Bury has found that a few economic decisions are need to push this remarkable new product off to a successful start. The following will explain a few economic principles relating to the scenario.
Market Structure and Barriers to Entry
According to McConnell, Brue, & Flynn, 2009 a pure monopoly is a market structure in which one firm is the sole seller of the product. Because Bury holds, the patent for the new technology on converting printed word for text materials to a digital or audio product he will operate in a pure monopoly market. A pure monopoly gives Bury the advantage he needs and creates barriers of entry to competitors. Additionally, Bury can create unique coding for his technology to prevent competitors from sealing it.
Elasticity and Total Revenue Test
The price of the new digitizer is elastic. According to McConnell, Brue, & Flynn, 2009 total revenue and the price elasticity of demand are related. The total revenue test further determines the elasticity of demand. If total revenue changes in the opposite direction from price demand are elastic, which is what will happen in this case.
Pricing and Nonpricing Strategy
The current economic business cycle that reflects the United States economy is a trough. Additionally, the rise of inflation and interest rates will affect pricing for this product. Therefore, the price of the new product will be set affordably but not so low that buyers will mistake the device for a cheap product. Bury will need flexibility in pricing in the early stages and should be able to react quickly to changes in supply and demand. The new price of the products the digitizer will produce will be ranged from $9 to $20...
Overview
The Will Bury Scenario, provided by University of Phoenix online discusses Will Bury as an inventor who has created and patented a new product to transform printed words as in books or text materials into a digital or audio product. However, doing some extended research, Bury has found that a few economic decisions are need to push this remarkable new product off to a successful start. The following will explain a few economic principles relating to the scenario.
Market Structure and Barriers to Entry
According to McConnell, Brue, & Flynn, 2009 a pure monopoly is a market structure in which one firm is the sole seller of the product. Because Bury holds, the patent for the new technology on converting printed word for text materials to a digital or audio product he will operate in a pure monopoly market. A pure monopoly gives Bury the advantage he needs and creates barriers of entry to competitors. Additionally, Bury can create unique coding for his technology to prevent competitors from sealing it.
Elasticity and Total Revenue Test
The price of the new digitizer is elastic. According to McConnell, Brue, & Flynn, 2009 total revenue and the price elasticity of demand are related. The total revenue test further determines the elasticity of demand. If total revenue changes in the opposite direction from price demand are elastic, which is what will happen in this case.
Pricing and Nonpricing Strategy
The current economic business cycle that reflects the United States economy is a trough. Additionally, the rise of inflation and interest rates will affect pricing for this product. Therefore, the price of the new product will be set affordably but not so low that buyers will mistake the device for a cheap product. Bury will need flexibility in pricing in the early stages and should be able to react quickly to changes in supply and demand. The new price of the products the digitizer will produce will be ranged from $9 to $20...