Good morning,

Please help me reply to these two posts:

Post 1

Unit 8 Discussion Board Post

According to Krugman and Wells (2020) a perfect market is a market in which every producer is a price-taking producer. Producers become price-taking producers when the market is comprised of so many producers that the competition cannot be identified individually and thus the individual producer does not have the ability to influence the market price. For this reason, I would want to choose a business for which the market is an imperfect one. This could lead to the potential ability to monopolize the market and maximize profitability while simultaneously decreasing risk factors and threats to my business. This is a business decision not a moral decision in my opinion.

A.

I would research industries that have a high risk of becoming monopolized such as localized electricity. Electricity production is a very hard industry to infiltrate because the capital needs, or fixed costs required to start up, are so high. For this discussion I will assume that I have the required capital or can obtain the required capital to start up small. Some of the different types of costs I would have would be salaries and wages costs, equipment costs, maintenance costs, insurance and liability mitigation costs, legal fees, legal representation costs, regulatory costs, and fuel costs just to name a few.

B.

Regarding competition in this industry there are the obvious industry giants like PGE and SMUD. There are other large producers as well such as Exelon, Duke Energy, Southern Company and NextEra Energy all of which boast more than 15 billion dollars in annual revenue.

C.

My approach would be to build satellite plants in rural areas on the boarders of these larger company's pipelines where their prices are elevated above the average. By operating localized plants in these strategic locations, I would be able to afford to offer my product at the average rate or slightly below, which will be a significant savings for the local population.

D.

I would determine how much product to produce by analyzing the potential demand of these rural locations. I would assume that my company's lower price point would attract a minimum of 60% of the consumers who are currently buying from larger companies, I would use that metric as an indicator of required plant size and output requirements. Perhaps I would generate enough product to sell to 80-90% of the available consumers initially, and as my utilization grows from plant to plant, I would use the additional profit as reinvestment capital for the expansion of the highest performing plants.

Post 2

Hey yall!

I am obsessed with candles and enjoy making them. I have decided to pursue my passion and have decided that I am opening a candle shop! Before I can open my store, I have to review some critical information.

1. What different types of costs would you have?

In order to open my store, I would have some expenses. Some of these expenses would be fixed costs and others would be variable costs. Right off the bat, my fixed costs would be rent for the store space that I would need, as well as the utilities for that space. My variable costs would be the ingredients I would need in order to make my candles, as well as, the tools I would need, like different containers and scents.

1. What competition might you experience?

Well, I am sure that other people in my area are also small businesses that sell candles. Not to mention the corporations, like Walmart, where you can go to get candles. I would need to set myself apart from everyone else that sells candles.

1. How would you determine the price at which you would sell your product?

I would determine my prices by the size of the candle as well as the number of ingredients it took to make. For example, If I have a 16 oz candle that would burn for 100 - 120 hours, I would maybe look to sell that for $20 versus a 4 oz candle that will only burn for less than 30 hours, which I would sell at like $5 - $8.

1. How much product would you produce? How did you determine this?

In the beginning, I would produce a set # of each candle scent that I have. I would then increase the amount that I am producing by how popular they are. For example, If I start with 50 lavender-scented candles and 50 vanilla-scented candles and the lavender only sells 23 and the vanilla sells 46, then I will know to increase my vanilla production and keep the production of the lavender about the same.