Monopolistic Competition Essays

Words: 1774
Pages: 8

Assignment 2: Operations Decisions
Aug 13, 2015

Low-calorie Frozen Food Industry
Low –calorie foods are those with 40 calories or less per serving. The low calorie frozen foods is the choice for a healthy and easy to cook meal. There are several choices of low calorie frozen, microwaveable food products available in the market nowadays (Creasy, 2015). This implies that the market structure is somewhere between a monopolistic and oligopolistic competition, leaning more towards monopolistic competition (, 2015). The low-calorie frozen food products available in the market are relatively similar with slight differentiation amongst them.
Leading Competitors
The lifestyle of people has
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Additionally, this also tells us that low-calorie frozen foods tend to have high income elasticities. This was discussed before that as technology improves, the standard of living improves. Hence, as income of the consumer increases, he/she is more likely to purchase frozen food products (Mankiw & Reis, 2010).
Factors of Change
In order to determine the likely factors those have caused the change in business operations, we search for aspects of market which would influence such a change. Since the demand of microwaveable, frozen low-calorie food products is directly related to the demand of microwaves and refrigerators, this is a vital factor of influence. If the price of microwaves was to fall, more and more people will buy microwaves and in turn the demand of microwaveable frozen foods will rise. Additionally, if price of refrigerators falls then there would also be a rise in demand of frozen foods. Although, in the latter case, the rise in demand may be negligible since people use refrigerators for multiple purposes. Thus, this proves that the price of related goods is an important influence for the market structure of goods.
Another important factor which can also impact market structure is substitutes. A substitute product can be brought into the market by a new firm. This will force the companies to lower prices in order to maintain their competitive advantage. It is vital to note that the barriers to entry are a few as this is a