26 Jul HOW WILL THIS TECHNOLOGICAL ADVANCE IMPACT YOUR PRODUCTION AND PRICING PLANS?
You are the manager of BlackSpot Computers which competes directly with Condensed Computers to sell Show more You are the manager of BlackSpot Computers which competes directly with Condensed Computers to sell high-powered computers to businesses. From the two businesses perspectives the two products are indistinguishable. The large investment required to build production facilities prohibits other firms from entering this market and existing output firms operate under the assumption that the rival will hold constant. The inverse market demand for computes is P=5900 Q and both firms produce at a marginal cost of $800 per computer. Currently BlackSpot earns revenues of $4.25 million and profits (net of investment R&D and other fixed costs) of $890000. The engineering department at BlackSpot has been steadily working on developing an assembly method that would dramatically reduce the marginal cost of producing these high powered computers and has fond a process that allows it to manufacture each computer at a marginal cost of $500. How will this technological advance impact your production and pricing plans? How will it impact Blackspots bottom line? Comment Show less
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