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QUESTION Breville, an Australian maker of small kitchen appliances, has been selling an espresso machine called the Breville

Dual Boiler (BDB) for more than a year. Your task is to comment on the market for the BDB and Brevilles cost structure, pricing strategy and profits following the points below: a) Which other products can be compared to the BDB? That is, what are the likely substitutes for the BDB? [Hint: look for what the BDB can do (and how well) compared to other coffee machines taking into account the price at which they are sold.] b) Are the BDBs substitutes close? That is, does Breville face a strong competition in the BDBs price range? Is Breville likely to have a little or a lot of market power when selling the BDB? [Note: a perfectly competitive firm has not market power at all, a monopolist has huge market power.] c) Is Breville likely to have a cost advantage over their competitors on the production of the BDB? [Hints: 1) find out where the BDB is assembled and where the competing machines are manufactured. 2) Are economies of scale likely to play a role? Why?] d) What is the BDBs recommended retail price (rrp) in Australia? What is the BDBs rrp in the USA? Is the BDB sold at different prices in Australia? If so, what is the price range? In light of your previous answers and your knowledge of economics, what is driving this price dispersion? TAKE INTO ACCOUNT 1. This essay is 500 words long, not including references, appendices and diagrams. Any essays longer than 500 words will only be read and graded up to the first 500 words. 2. Apply the relevant theories from the unit of study when analysing the problem. All the relevant theories can be found in the lecture notes. No need to look further than that. 3. You must back up with evidence or a reasonable assumption all statements that you make. Your claims should be, where appropriate, supported by references which may be Internet sources. [Note: a visit to one or more stores where they sell the BDB may also help.] Make sure you reference your essay in accordance to the University of Sydney Business School standards.