Paper

Select a new, realistic good or service for an existing industry.

Write the economic analysis section of a business proposal. This will include statements about the market structure and the elasticity of demand for the good or service, based on text book principles. You need to create hypothetical data, based on similar real world products to estimate fixed and variable costs.

Required Elements: You must address each question in a separate section and use appropriate section headings, otherwise, 5 points will be deducted if you do not follow this.

·        

Identify market structure

·         Identify elasticity of the product

·         Include rationale for the following questions:

1.   
How will pricing relate to elasticity of your product? (Hint: you should base your argument on the Total Revenue Test.)

2.   
How will changes in the quantity supplied as a result of your pricing decisions affect marginal cost and marginal revenue?

3.   
Besides your pricing decisions, what are your suggested non-pricing strategies? What non-pricing strategies will you use to increase barriers to entry?

4.   
How could changes in your business operations alter the mix of fixed and variable costs in line with your strategy?

No more than 1000 – 1200 words your proposal is consistent with APA guidelines.