true? (a) A profit maximising monopolist will always set price and output at a level where demand is price elastic. X (b) A profit maximising monopolist always produces where Average Revenue equals Average Cost (c) A profit maximising monopolist will‚ in long run equilibrium‚ always use a scale of plant that minimises long run Average Costs. (d) A profit maximising monopolist will always produce where marginal cost is greater than price. Question 2 Assume two rival car rental companies (Ace Rentals
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Price elasticity: products with high quality or being highly processed tend to be inelastic demand‚ while row materials are usually elastic. For example‚ a price increase in a car only leads to little decrease in demand‚ in the contrary; a price increase in oil could leads to huge change in market. Market-skimming pricing: two examples came to my mind when I saw this concept‚ Samsung and Apple. As I know that‚ Samsung often set an extremely high price when they release a new cellphone‚ after few
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corporate bonds? 13. An income elasticity (Ey) of 2.0 indicates that for a ____ increase in income‚ ____ will increase by ____. 14. An increase in each of the following factors would normally provide a subsequent increase in quantity demanded‚ except: 15. Which of the following would tend to make demand INELASTIC? 16. If demand were inelastic‚ then we should immediately: 17. Marginal revenue (MR) is ____ when total revenue is maximized. 18. When demand elasticity is ____ in absolute value (or
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characterised as being price takers dependant upon supply and demand. Tesco is the market leader in the UK and 5 international countries (Tesco 2006). Due to the fact that they are in an oligopoly market‚ Tesco ’s decisions would be mainly influenced by the decisions that their other few competitors‚ such as Sainsbury‚ are making too as well as how they are likely to respond to Tesco ’s actions‚ which include their expansion into other product ranges‚ integration‚ and price strategies. 2. BARRIERS
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Export Price Index/Import Price index x 1000(base year) An increase in trade of terms is considered favourable A decrease in trade of terms is considered unfavourable A favourable or an increase in the terms of trade may occur because: -the average export price increases and the import price stays the same or average export price increases faster than import price increases. Also‚ it may occur when the average export prices stays the same but import prices fall or average export prices fall
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incumbents (by lowering price‚ for example). However‚ it is important to note that there is a heated rivalry among incumbents due to low seller concentration‚ high price sensitivity from consumers‚ dynamic price changes and strong exit barriers. Refer to Exhibit 1 for a detailed observation of the forces influencing the industry’s attractiveness. The industry offers opportunities and poses threats in several areas. In the economic environment‚ the rising oil prices increases costs in the supply
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sales picked up in 2009‚ there is a drop in alkaline battery sales. This means people started to have money‚ and buying more zinc batteries‚ which are cheaper. This can be explained more in terms of income elasticity of demand. Income elasticity of demand is the responsiveness of demand to changes in income. People tend to spend more on goods
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1: Microeconomics and Biz Strategy References: Pindyck&Rubinfeld. Chap.1 What are the firm’s important functions and strategies ? 1. Selling need to know consumers purchasing behavior for example‚ what if the price increases: price elasticity of demand marketing/product positioning strategies Topics 3-5 lectures 2. Production Supply function/producers output decision how to produce? Firms output decision: Short run vs LR For example‚ should the firm continue producing
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following have on the demand for small automobiles such as the mini cooper and smart car? A Demand increases B Demand increases C Demand decreases D Demand decreases E Demand Increases Question 6 What effect will each of the following have on the supply of auto tires? A Advances in technology should increase the supply B A decline in the number of firms in the tire industry will decrease supply C Increase in the price of rubber will make supplies high due to passing the price on to the consumer D
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Parle G: Case Analysis The Parle G case is a classic scenario where the price elasticity of a particular product is exceedingly high and any deviations as far as price change is concerned can have long term ramifications which could be in the form of declining sales‚ loss of market share consequently leading to revenue and profitability decline. At the outset it’s important to look at the case in
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