Applied Managerial Economics
At midday, you share an elevator ride with AutoEdge’s Executive Vice President, George Wirtz.
“Ingrid tells me you gave her some useful information about the relocation issue,” he says. “I could use your help with a presentation I’m making next week to a group of large shareholders.”
“Of course,” you say. “How can I help?”
“I understand that there are four different types of market structures: monopoly, oligopoly, monopolistic competition, and pure competition,” he says. “I know that each of these market structures differs in the number of companies that compete in each one, the level of competition, entry and exit in the economy, the product price range, and the product range.”
“I’m with you so far,” you say.
“Normally, I wouldn’t go into all of these economic terms with shareholders,” he says, “but I’ll be talking to a small group of sophisticated businesspeople who understand the terminology. I’m not an expert in this end of the business, and I want to check my understanding of it. What type of market structure does AutoEdge fit into? How does this market structure impact our level of competition, elasticity of demand, price, and position in the industry?”
“Well, there’s a long and a short answer I could give you,” you say. “I’m on my way to a lunch meeting right now and will be out of the office for the rest of the afternoon. Would it be okay if I send an e-mail later this afternoon?”
“Yes,” he says. “That would be fine, but I want some research to support the information, too. Would you be able to send me a report about this by the end of this week?”
“Sure,” you say. “I’ve already done some of the research, so that deadline is doable.”
“Oh good,” he says. “I appreciate your help!”
Answer all questions that Mr. George Wirtz asked of you in this small dialogue in the elevator. Explain in detail.