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Ties A Us is a new start-up business, selling high quality imported men's ties from Italy via the Internet. The managers, who are also the owners, are young and inexperienced, and they are risk takers. They feel confident that importing quality ties and selling them via a website will be successful and that the business will grow quickly, despite the fact that the clothing industry is an extremely competitive marketplace. The managers expect that the enterprise will have losses in the short-term, so they have decided to pay themselves modest salaries (included in administrative expense in Table 1) and pay no dividends for the foreseeable future, since dividends can be paid only from earnings. Despite the expected losses, the managers are convinced that growth will quickly follow and that they have invested enough money in website server development to ensure that the server can handle the very high levels of predicted growth. Certain website development costs are being expensed as incurred in accordance with ASC 350-50 as shown below in Table 1. Expensed costs include preliminary planning, post-implementation operation, website hosting costs, and costs to register the website with Internet search engines. Other costs are being capitalized as intangible assets, also in accordance with ASC 350- 50. Those capitalized costs include application development costs and the costs to obtain and register an Internet domain. Significant advertising expenditures were incurred in the first two quarters to launch both the website and the new products. It is not expected that advertising expenditures will continue to be as high in the future. The advertising costs were expensed in accordance with ASC 720-35-25-1 through -5. Customers can buy a variety of styles, patterns and colors of ties at various price points. The business's financial results for the first two quarters in business are shown below in Table 1. Table 1 Quarter 1 $ 420,000 (201,600) $ 218,400 Quarter 2 $ 680,000 (367,200) $ 312,800 Sales revenue Less: Cost of Goods Sold Gross Profit Operating Expenses: Website development expense Administrative expense Distribution expense Advertising expense Other variable expenses Total operating expenses Operating income (loss) $120,000 100,500 20,763 60,000 50,000 $ 90,000 150,640 33,320 40,800 80,000 $(351,263) $(132,863) $(394,760) $( 81,960) Required: A Briefly describe the four different types of market structures and assess which market structure Ties Us is operating in