1. Explain why understanding the market structure in a which company operates is important to being an effective manager.

2. Explain the market structure that is most likely operating in the market for the Deluxe boxes.

3. Explain the market structure that is most likely operating in the market for the Standard boxes.

Future Supply and Demand for cardboard boxes 1. Base for the Daily US Demand of Daily US Supply of produc Standard Boxes (in Price per box Standard Boxes (in billions of boxes per billions of boxes per day) day) $17.00 2 0.1 $17.20 1.8 0.2 $17.40 1.6 0.3 $17.60 1.4 0.4 $17 80 1.2 0.5 $18.00 1 0.6 $18.20 0.8 0.7 $18.40 0.6 0.8 $18.60 0.4 0.9 $18.80 0.2 1 $19.00 0.1 1.1 Question 1: Create a Supply and Demand Chart for the Standard box below Supply and Demand for the Standard Box $19.50 $19.00 518.50 Price ($ per box) 518.00 517.50 $17.00 $16.50 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 Quantity of Boxes (billions of boxes per day) - Daily US Demand of Standard Boxes (in billions of boxes per day) Daily US Supply of Standard Boxes (in billions of boxes per day)Standard Profit Maximization boxes sold Price Revenue (price Variable Cost per Variable Cost per month x volume) ( cost per unit x Fixed cost per Total Cost (Fixed standard box Daily Profit MR (marginal revenue) = (new revenue - old revenue) / (new qty - old qty) (millions) MR volume) month (millions) + Variable) revenue - all costs) MC MC (marginal cost) = (new total cost - old total cost) / (new qty - old qty) Maximize Profit 22.00 $ 110.00 10.00 $ when MR = MC 5.5 S 21.60 $ 50.00 | $ 50.00 6 118.80 10.00 $ 60.00 $ S 10.00 $ 21.20 55.00 $ 127.20 $ 10.00 $ 10.00 $ 65.00 $ 60.00 $ 53.80 $ 17.60 $ 10.00 6.5 S 20.80 $ 135.20 $ 10.00 $ 10.00 $ 70.00 $ 57.20 $ 16.80 $ 10.00 7 S 20.40 $ 142.80 $ 65.00 $ 10.00 $ 10.00 $ 75.00 $ Standard Box Profit Maximization 7.5 70.00 S 10.00 $ 60.20 $ 16.00 $ 10.00 20.00 $ $80.00 150.00 $ 80.00 S 8 10.00 | $ 75.00 $ 62.80 $ 15.20 $ 10.00 19.60 $ 156.80 $ 10.00 $ 80.00 $ 85.00 $ 10.00 $ 65.00 $ 14.40 $ 10.00 $70.00 8.5 10.00 $ 90.00 $ $60.00 9 19.20 $ 163.20 $ 10.00 $ 66.80 $ 13.60 $ 10.00 18.80 $ 35.00 $ 169.20 $ 10.00 $ 95.00 $ 68.20 $ 12.80 $ 10.00 $50.00 9.5 10.00 $ 18.40 $ 90.00 $ 174.80 $ 10.00 $ 10.00 $ 100.00 $ 10 18.00 $ 95.00 $ 180.00 10.00 $ 69.20 $ 12.00 $ 10.00 $40.00 10.5 10.00 $ 105.00 $ 10.00 $ 69.80 $ 11.20 $ 10.00 17.60 $ 100.00 $ 110.00 $30.00 184.80 $ 70.00 $ 10.40 $ 10.00 11 10.00 $ 17.20 $ 105.00 $ 189.20 $ 10.00 $ 10.00 $ 115.00 11.5 16.80 $ 10.00 $ 69.80 $ 9.60 $ 10.00 $20.00 110.00 $ 193.20 120.00 $ 69.20 $ 8.80 $ 10.00 $10.00 12 10.00 $ 16.40 $ 115.00 $ 196.80 $ 10.00 5 125.00 12.5 10.00 $ 16.00 $ 120.00 $ 200.00 $ 10.00 $ 68.20 $ 8.00 $ 10.00 10.00 $ 130.00 $ 13 125.00 $ 8 10.00 $ 66.80 $ 10 135.00 $ 7.20 $ 10.00 12 14 16 15.60 $ 202.80 $ 10.00 S 130.00 $ 65.00 $ 6.40 $ 10.00 Standard Boxes Sold per Month (millions) 13.5 15.20 5 14 205.20 10.00 $ 10.00 $ 140.00 $ 62.80 $ 5.60 $ 10.00 14.80 $ 135.00 $ 207.20 $ 10.00 $ 10.00 $ 145.00 $ 140.00 $ 10.00 $ 60.20 $ 4.80 $ 10.00 150.00 $ 57.20 $ 4.00 $ 10.00 S 18.00 Profit Maximization Deluxe boxes sold Price Revenue (price Variable Cost per Variable Cost per month x volume) standard box (cost per unit x Fixed cost per Total Cost (Fixed Daily Profit month (millions) MR (marginal revenue) = (new revenue - old revenue) / (new qty - old qty) (millions) volume + Variable) (revenue - all costs) MR MC (marginal cost) = (new total cost - old total cost) / (new qty - old qty) Maximize Profi MC 30.00 $ 30.00 10.00 $ 1.2 $ 29.50 $ 10.00 $ when MR = MC 35.40 $ 3.00 $ 10.00 $ 13.00 $ 1.35 12.00 S 17.00 S 29.00 $ 39.15 $ 3.00 $ 10.00 $ 15.00 $ 1.5 28.50 $ 13.50 $ 20.40 $ 27.00 $ 10.00 42.75 3.00 $ 0.00 $ 16.50 9 1.55 28.00 $ 15.00 S 43.40 $ 3.00 S 22.65 $ 25.00 $ 10.00 10.00 $ 18.00 15.50 $ 3.00 $ $ 24.00 $ 10.00 Deluxe Box Profit Maximization 1.6 27.50 $ 44.00 5 18.50 $ 24.90 $ 13.00 $ 10.00 $30.00 1.65 10.00 $ $ 27.00 $ 16.00 S 44.55 $ 3.00 5 19.00 S S 10.00 $ 16.50 $ 25.00 $ 12.00 $ 10.00 1.7 26.50 $ 45.05 5 3.00 S 19.50 S $25.00 1.75 10.00 $ 26.00 $ 17.00 5 45.50 $ 3.00 25.05 $ 11.00 $ 10.00 10.00 $ 20.00 S 17.50 | $ 3.00 $ 25.05 $ 10.00 $ 10.00 $20.00 1.8 25.50 $ 45.90 $ 20.50 $ 25.00 $ 9.00 $ 10.00 ily Profit 1.85 10.00 $ 25.00 $ 18.00 $ $15.00 46.25 $ 1.9 10.00 $ 3.00 $ 4.50 $ 18.50 $ 21.00 $ 46.55 $ 3.00 5 24.90 $ 8.00 $ 10.00 21.50 $ 24.75 $ To 1.95 10.00 $ 19.00 $ $10.0 24.00 $ 46.80 $ 3.00 5 7.00 $ 10.00 2 23.50 $ 10.00 $ 22.00 $ 19.50 $ $ 6.00 $ 10.00 $5.00 47.00 $ 2.05 10.00 $ 3.00 $ 22.50 $ 23.00 $ 20.00 $ 47.15 $ 3.00 $ 24.30 $ 5.00 $ 10.00 24.00 $ 4.00 $ 10.00 S- 2.1 10.00 $ 2.50 $ 20.50 $ 47.25 $ 3.00 $ 0.8 10.00 $ 21.00 $ 23.65 $ 3.00 $ 10.00 1.2 1.4 1.6 2.2 2.15 22.00 5 47.30 $ 3.00 $ 1.8 10.00 $ 21.50 5 24.00 $ 2 2.4 23.25 $ 2.00 $ 10.00 Deluxe Boxes Sold per Month (millions) 2.2 21.50 $ 47.30 $ 3.00 5 2.25 10.00 5 22.80 $ 21.00 $ 22.00 5 3.00 5 10.00 $ 22.50 5 25.00 $ 1.00 $ 10.00 47.25 5 3.00 5 22.30 $ 25.50 5 - $ 10.00 21.75 $ (1.00) $ 10.00Price Elasticity Quantity Price 10 S 18.00 Original 9.5 S 18.40 New Price Elasticity of Demand % change % change Elasticity of Demand 5.128% .198% 2.33 $18.45 9.5, $18.40 $18.40 $18.35 Elasticity: Price Elastic US $18.30 By how much did revenues increase or decrease as a result of the change in price? $ (5.20) $18.25 By how much did profits increase or decline? $ (0.20) $18.20 $18.15 $18.10 Standard $18.05 Boxes sold Variable Cost Fixed cost per $18.00 Price Revenue (millions) Variable Cost per Total Cost Monthly Profit 10, $18.00 per day cardboard box $17.95 ( millions) month millions) (millions) (millions) 9.4 9.5 9.6 9.7 9.8 9.9 10 10.1 10 18.00 $ 180.00 $ 0.00 $ 100.00 $ 10.00 $ 10.00 $ 70.00 Number of Standard Boxes Sold (millions) 9.5 18.40 $ 174.80 $ 10.00 $ 95.00 $ 10.00 $ 105.00 $ 69.80 Quantity Price 9.5 18.40 Original 10.5 S 17.60 New Price Elasticity of Demand % change % change Elasticity of Demand $18.50 9.5, $18.40 10.000% $18.40 4.444% 2.25 $18.30 $18.20 Elasticity: Price Elastic $18.10 By how much did revenues increase or decrease as a result of the change in price? 10.00 $18.00 By how much did profits increase or decline? $17.90 $17.80 $17.70 Standard $17.60 10.5, $17.60 Boxes sold Price Revenue (millions) Variable Cost per Variable Cost Fixed cost per Total Cost Monthly Profit $17.50 per day cardboard box 9.4 9.6 (millions) month 9.8 millions) 10 10.2 10.4 10.6 (millions) (millions) Number of Standard Boxes Sold (millions) 9.5 $ 18.40 $ 174.80 $ 10.00 95.00 $ 10.00 105.00 $ 69.80 10.5 17.60 $ 184.80 $ 10.00 $ 105.00 $ 10.00 $ 115.00 $ 69.80 Quantity Price 1.55 S 28.00 Original 1.35 S 29.00 New Price Elasticity of Demand 529.20 1.35, $29.00 % change % change Elasticity of Demand $29.00 13.793% 3.509% 3.93 $28.80 Elasticity: Price Elastic $28.60 By how much did revenues increase or decrease as a result of the change in price? (4.25) $28.40 By how much did profits increase or decline? (2.25) $28.20 $28.00 Deluxe 1.55, $28.00 boxes sold Price Variable Cost per $27.80 Revenue (millions) Variable Cost Fixed cost per Total Cost Monthly Profit 1.3 per day 1.35 1.4 1.45 1.5 1.55 1.6 metal box (millions) month (millions) (millions) (millions) Number of Deluxe Boxes Sold (millions) 1.55 $ 28.00 $ 43.40 $ 10.00 $ 15.50 $ 3.00 $ 18.50 $ 24.90 1.35 29.00 $ 39.15 $ 10.00 $ 13.50 $ 3.00 $ 16.50 $ 22.65Table 2 Future Supply and Demand for cardboard boxes Daily US demand of Daily US supply of Price per box Deluxe boxes (in billions Deluxe boxes (in billions of boxes per day) of boxes per day) $25.00 2 30 0.3 $25.50 1.8 29.5 0.4 $26.00 29 1.6 0.5 $26.50 1.4 28.5 0.6 $27.00 28 1.2 0.7 27.5 $27.50 1 0.8 $28.00 0.8 27 0.9 $28.50 26.5 0.6 1 $29.00 26 0.4 1.1 $29.50 25.5 0.2 1.2 $30.00 25 0.1 1.3 Question 2: Create a Supply and Demand Chart for the deluxe box below Deluxe Box Supply and Demand $30.50 $29.50 $28.50 Price (Per box) $27.50 $26.50 $25.50 $24.50 0.5 1 1.5 2 Quantity of Boxes (in billion) Daily US demand of Deluxe boxes (in billions of boxes per day) - Daily US supply of Deluxe boxes (in billions of boxes per day)