Short Case Scenario 1-1

question 32

Essay

Short Case Scenario 1-1
Expert Electronics is a manufacturer of computers on the large, but isolated, island nation of New Vermont. Although imports are extremely limited because of difficult navigation to and from New Vermont, there are a handful of computer manufacturers in addition to Expert Electronics. While the government provides some services, such as public education and a well-maintained road system, almost all businesses are privately owned. Home ownership is unusually high, with 80 percent of all families owning their own home. Expert Electronics is selling a state-of-the-art desktop computer system for 1,299 veros (the local currency). At this price, Expert Electronics is able to fill all orders, but they have no waiting list.
-Even with a handful of computer manufacturers on the island,the industry runs the risk of market saturation in the long run.How might this affect equilibrium price?

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Definitions:

Manufacturing Cycle Efficiency (MCE)

Process (value-added) time as a percentage of throughput time.

Division's Margin

The profit generated by a specific division within a company after direct costs and expenses attributable to that division are subtracted.

ROI

Return on Investment, a performance measure used to evaluate the efficiency of an investment or to compare the efficiencies of several different investments.

Investment Opportunity

A financial investment or venture that has the potential to yield returns.