Critical Analysis of Market for Good or Service (60 points) Consider the company where you work or a company that you know well. Pick a key product or service provided by that company and analyze the market for that product or service using the tools we have been developing in the economics course. The text of the analysis should be around 900-1000 words. You can also include up to two exhibits (Figures or Tables) but do not include them unless you write about them in the text ofthe analysis. Write the analysis for me and the people in the class who know the economic concepts that we have been discussing. So don't spend time defining the concepts. Show that you know the concepts by how you use them. Teach me something about the issue that I cannot easily find out. When you make a statement about how the market works, support the statement with actual data, quotes, or narratives that you cite. For example, \"The rise in price and quantity sold for Dell computers has been driven by increases in income. Between 2001 and 2004 surveys have shown that average per capita incomes in the U.S. rose by 6 percent, while the quantity of Dell computers sold has risen 4 percent\" (Smith, 2007, 5). [Then have a reference list that includes Smith, Adam. \"P&G Market analysis." Fortune. August 5, 2007.] There are many issues that you might address, pick one or two and go into depth about those issues. You are teaching me and your colleagues about this company, so the quality of what you tell us and your use of the economic concepts will determine your score. I should be getting the third or fourth draft not the first draft of what you write. How would you define the market for this product (or service); who are the leading competitors producing reasonably close substitutes for this product? How much market power does your firm have in this market? What are the sources of the market power if present or why does the firm have little market power? For example, are there some types of barriers to new entry or to imitation that allow your firm to earn higher than average profits? Are the competitors producing exactly the same product or are they finding ways to differentiate their products from each other? Describe the nature of the way they compete in depth. What are the 2 most important factors that influence the market demand for this product and how have they changed over the past few years? You might see ifthere are elasticities estimated already for these products. If not, make reasoned arguments as to the rough size of the elasticities. Collect some data on price and quantity changes and factors that might have caused shifts in supply and demand and perform your own estimation. Or take the data and talk about the dominant shifts of supply and demand and document these changes with the data. Don't waste space drawing generic supply and demand graphs with shifts. You can describe the shifts more effectively in words. Don't just tell us a factor shifts the demand or supply. Tell us how much it shifts. What is your company's cost structure for the product or service and how does it compare with other firms? For example, how important are fixed and variable costs? What are the components of fixed and variable costs? Are there economies of scale in the long run? Do you have cost advantage over your competitors? What is the source of the advantage? Try to get ideas of the numbers involved. Lay out a spreadsheet that shows the cost structure for a specific product. Put real numbers in where you can and fill out the rest of the spreadsheet with educated guesses. Explain and defend your estimates, or give a range of possible outcomes based on different scenarios. What are the specific costs and benefits of a key decision that your company is making in this market or industry? Perform a cost-benefit analysis of the benefits and costs from your project. If you are recommending a specific course of action, use a spreadsheet and walk us through the costs of the course of action and the anticipated benefits. Explain whether your recommended course of action is consistent with your company's current strategy or will require a change in strategy. Try to quantify costs and benefits with real numbers and educated guesses. How profitable will this course of action be? Explain and defend your estimates, or give a range of possible outcomes based on different scenarios. Is your firm able to price discriminate? Be careful to sort out price differences that arise due to differences in costs of providing the service or item as compared with price differences that arise from attempts to extract consumer surplus. If the firm can price discriminate, how do they meet the conditions needed to do so? Are there ways that you could find to increase your company's ability to price discriminate? What are the opportunities for collaboration/cooperation with other firms? Do you rely on other firms to manufacture key components of your product or to distribute the product through certain channels? Do you (or, could you) collaborate with other firms on a technology standard for your product? Does government policy influence the markets? If so, how. Think in terms of tariffs, regulations, licenses, minimum wages, sales taxes, environmental issues, and other policies. Be specific about the nature of the government activity. For example, if it is a regulation, describe the precise features ofthe regulation and how they specifically affect your business or market. Give us data or estimates of how much impact the regulation has on prices, costs, employment etc. If you can find well done studies that give estimates that will be great. Make sure to cite them if you use them