Does the firm have substantial market or monopoly power? Why/why not? 2. What factors have a major...

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Does the firm have substantial market or monopoly power? Why/why not? 2. What factors have a major influence on the costs of production for the firm? Do you recommend any changes in input combinations to reduce the costs of production? 3. Are economies of scale relevant for this firm? Would you recommend any changes in the scale of production to reduce costs? 4. What factors affect the demand for the output of this firm? Which of these factors seem most important? What are the major substitutes and complementary products for the firm? What can you infer about the size of the relevant elasticities? 5. Based on this information, should the firm develop a new product, expand into another area of the market, etc.?

1 MICROECONOMICS ASSIGNMENT 2 (10%) Project Guidelines Your report is an analysis and forecast of the microeconomic factors affecting a firm of your choice. This can be a firm in the same industry you chose for Assignment 1, OR you can choose a new firm and industry. Use the theory developed in class, outside articles, and current and historical data on firm activity. Some Specifics Organization of the report: 1. Answer the ‘Firm Specific Questions’ 1 to 5. 2. Use the Questions as subheadings. Length:  Approx 7-10 pages, double spaced. Include charts, tables, etc. to help explain your case  Your report must also have a cover page with student name & number  Style is double-spaced, standard margins (1 inch) and font size (12pt)  Reference all articles and readings using APA 2 SAFEASSIGN/TURNITIN THE INSTRUCTOR USES SAFEASSIGN OR TURNITIN. NOTE THAT YOU ARE RESPONSIBLE FOR THE FULL CONTENT OF THE ASSIGNMENT SUBMITTED. IN PARTICULAR, IF ANY PART OF THE ASSIGNMENT IS PLAGIARIZED, YOU WILL BE PENALIZED UNDER HUMBER’S ACADEMIC REGULATIONS. NO STUDENT WILL BE EXEMPT FOR THE REASON THAT HE/SHE WAS NOT THE PERSON RESPONSIBLE FOR COMPLETING A PORTION OF THE ASSIGNMENT. Firm Specific Questions 1. Does the firm have substantial market or monopoly power? Why/why not? 2. What factors have a major influence on the costs of production for the firm? Do you recommend any changes in input combinations to reduce the costs of production? 3. Are economies of scale relevant for this firm? Would you recommend any changes in the scale of production to reduce costs? 4. What factors affect the demand for the output of this firm? Which of these factors seem most important? What are the major substitutes and complementary products for the firm? What can you infer about the size of the relevant elasticities? 5. Based on this information, should the firm develop a new product, expand into another area of the market, etc.? DUE: SEE CRITICAL PATH SUBMIT ONLINE ONLY! - under ‘ASSIGNMENTS’ Tab. Late Penalties Report Late Penalties:  10% if not submitted online.  10% per day if late.  Late projects are not accepted more than one week past the scheduled due date. The report receives a grade of zero.

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Komalavalli · Accepted Answer

Analysis on market power of firm Microsoft in US
For analyzing the market power of a firm I have chosen Microsoft in software industry. In software technology Microsoft is considered to be a global market leader especially in cloud computing .It is the world’s leading cloud player and largest developer of windows OS. Annual revenue of $23.2 billion was generated in 2018 through its commercial cloud software Such as Azure, Office 365 commercial and dynamics 365.It ranks 4th in the world largest companies in 2018 with a market value of $750.6 billion. It operates in more than 190 countries worldwide. Microsoft has large number customers with 1.2 billion office users and 60 million office 365 commercial users.
Market power of Monopoly firm:
	Monopoly market is dominated by single seller. The firm makes supernormal profit by selling their products at high prices. They are price maker. There will be high barriers to entry in the market. There is no close substitute for the monopoly products in the market. Monopoly firm has control over the supply of products.
Market power of Oligopoly firm:
	Situation of Several firms controls the major share of market is known as oligopoly market power. An oligopoly firm sells either differentiated or homogenous products. Dominant firms influence the price of a product in the market. Firms can earn a supernormal profit; there is a barrier to entry in oligopoly market. Oligopolies can either be a non collusive or collusive. A non collusive refers to a market situation where the firms in the market compete each other rather than cooperating whereas a collusive oligopoly cooperates each other decision in determining output or prices in the market.
Based on the above market structure, it was clear that Microsoft firm is an oligopoly firm. It is one of the market leaders in software development industry. This firm is a price making because in software development market different firm produces different products. It is a non collusive oligopoly, because different firms including Microsoft fix different prices for their product in the market. In software production there exist a barrier to entry new firm in to the industry due to the existence of high competitiveness. 
2. Factors that have major influence on Microsoft Software development
Labor and technological factors have a major influence on the cost of production in software development. For developing particular software it involves more time and requires skilled people, those who have knowledge on developing the software. After developing those software it needs undergo testing process .this process requires software tester labor to detect any flaws if arises in the software .In order to have skilled labors huge amount should be spent on these labors in terms of salaries. After launching the software product in the market a firm should have a customer support labors who will resolve the queries of the consumer. Technology plays an important role in this production because the labors will work faster with an advanced computer that has speed processor and has a capacity to store more documents. Both high technology and skilled labors would cost more for a software development company.

Does the firm have substantial market or monopoly power? Why/why not? 2. What factors have a major influence on the costs of production for the firm? Do you recommend any changes in input combinations...

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