Business Proposal

Business Proposal

Will Bury is an inventor who understands that technology is the wave of the future. Will has created a way not only to transform words into audio but humanize the synthetic voice. Will wishes to improve the current status of his business that will enable a growth to obtain a building, staff, and growing profits. Currently Will is working along out of his garage and working another full-time position so anytime spent on this business takes time away from his family.

This business proposal is to assist Will in improving his current business. Discussion of the market structure, elasticity of demand, fixed and variable costs, profit-maximizing quantity, marginal cost and revenue, mix of pricing, product differentiation and minimizing costs will create a better business for Will.

Market Structure

The current market structure for Bury’s business is a monopolistic competition market. Will has created a technology that is new to the market and has obtained a patent. However, currently there is a close second with the books on CD. Since the product that Will produces has a subtle differentiation than competitors, a non-price competition exists. There are a large amount of competitors that can and will enter the same market due to the consumers wants and needs for increased technology. Example A below is an illustration of a short-run equilibrium of a monopolistic competition and example B below is an illustration of a long-run equilibrium.

The market power of a monopolistic competition is highly elastic although is not flat. The elasticity of demand will depend on the number of competitors and the degree of differentiation.

Increase Revenue

Bury has created a website that offers a few different titles of books converted to the humanized synthetic voice reader. Current charges for an older book are $10 and the cost for a newer book is $15. These costs were created with the current price of an audio CD of $20 in mind. The law of...