September 10, 2013
An inventor named Will Bury who whole-heartedly believes that readers of all ages will be listening or reading books on digital devices. The transition from hard copy books could be an invention that changes how the people of the world purchase these types of goods. Bury is aware that currently, these same books are available on compact discs, but he believes that these are an expensive purchase for consumers. He also believes that costs can be cut by having the digital device translate the books instead of having to hire humans to translate the book to a compact disc. The only thing that may cause some conflict in his idea is that when a digital device translates a book, it could sound digitized and readers or listeners may not adapt to the sound as easily as a human voice. Bury has thought this process through and has invented and patented technology that allows the digital device to take the printed text and develop a file that has an option for the reader to listen to a digital voice or listen to a synthetic human voice. Bury’s research has shown that he and his company have access to free books that are no longer under copyright safeguard. For those books that are still under copyright protection, he believes that paying a five dollar royalty fee for each of those titles will increase the catalogue choices for his customers. At this time, he has chosen to limit his selection to English language choices but his goal is to continue working towards multiple language translations that will provide better options for his customers that speak alternate languages. The following business proposal will assist Bury in improving his current product. Economic analysis of the new product will further define what would be necessary for the product to enter the market and be successful. The subjects to be outlined are as follows: profit-maximizing, increasing revenue, marginal cost, marginal revenue, credit markets, and the unemployment rate. Furthermore, pricing and non-pricing strategies, barriers to entry, product differentiation, and minimizing cost will also be discussed. Each of these topics will allow Bury to make an educated decision on how well his product will create revenues for his company. Market Structure
Will Bury’s business is a monopolistic competition market structure. Bury is aware that there is a current market of books on compact discs. The development and patenting of his product, which allows the option of digitally reading the text or having the book translated via a digital voice, has proven to be a similar product to the compact discs, however there are distinct differences between the two making the market for his product a monopolistic competition market structure. Profit-Maximizing and Increasing Revenues
Profit-maximizing is a figure that determines whether a product is price-elastic or inelastic. When the demand is elastic, decreasing the product price will show an increase in the total revenues. Equally, when the demand is inelastic, increasing the product price will show a decrease in the total revenues. By using the formula of marginal cost equals marginal revenue or MC=MR, Bury can decide what the ideal price of his product should be. He can show this optimization by presenting a revenue curve graph that represents what additional sales with various pricing can produce additional data needed to show what his optimal sales should be at the optimal pricing. Since his product is fairly new and of a newer design, and it does not depend on the amount of ready an individual is doing, then this particular product can be said to be elastic. The elasticity of this product is not very high because there are similar products that could be substituted for it. As Bury’s company grows, he will need to market his product to a larger audience. College students may be extremely interested in this technology. College...
References: McConnell, C. R, Brue, S. L., & Flynn, S. M. (2009). Economics: Principals, Problems, and Policies. Retrieved from http://ecampus.phoenix.edu/content/EbookLibrary2/content/eReader.Sapx.
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