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Simulation Game

In: Business and Management

Submitted By walawala
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Pages 7
Strategy Simulation Game
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Table of Contents
Introduction 2
Pure Monopoly 2
Oligopoly 3
Monopolistic Competition 4
Perfect Competition 4
Relation with Porter's Five Force Model 4
Conclusion 6
References 7
Strategy Simulation Game
Introduction
This paper explains the use of economics in managerial decision making based on the simulation. It describes decision making process of management in different market structures. The main objective of an organization is to maximize the profits in each type of market structure. Quasar Computers has done extensive research for the development of optical notebook. In the Year 2003, the company launched the first all-optical notebook computer branded as 'Neutron'. Neutron uses energy saving optical technology that established it as the market pioneer (Tata Interactive Systems, n.d.). The following pricing and other decisions are taken for this product in the different market structures.
Pure Monopoly
Quasar was the sole seller for the new and unique computer technology that established monopoly market structure for it. In the monopoly, profit maximization occurs at the point where marginal cost and marginal revenue equate to each other (Baumol & Blinder, 2005). In this scenario, Quasar objective was to maximize the profits because of its monopolistic situation caused by the patent rights on all-optical technology valid for three years from 2003. Quasar was able to control the demand of the product and to earn maximum amount of profit by setting the price at $2,550 per unit. This situation enabled Quasar to earn a total amount of profit of $1.29 billion. An increase in the price from this level would have caused a decline in the profit as well as quantity demanded. Similarly, a decrease in the price from this level also would have caused a decline in the profit

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