Posted at 12.17.2018
Answer B. Starbucks introduction of music download for customers is basically a differentiation strategy. The business wants to differentiate its products and Services from rivals like Dunkin' Donuts and Krispy Kane. The ultimate goal of the strategy is to increase demand for the company's products by offering clients a lot of preference. Customers are always attracted to new and impressive packages made available from the firms. The strategy can help Starbucks increase their customer base and earn much more profits that may eventually increase their market demand plus they can become a significant player in the industry.
Initially the businesses were enjoying supernormal profits as shown by the green shaded area, but as new businesses entered the market taking the benefit of supernormal profits, the marketplace supply curve shifted downwards to s2, the marketplace price shifted down along with the equilibrium price set by the firms. The additional companies increase production, which increases quantity and so turn the supernormal profits into normal one
Answer: The market for Microsoft stocks is perfectly competitive because a huge range of buyers and sellers exist searching for these stocks. Complete information is open to all the buyers and sellers in the market and the entry in this market is free. Each one of these factors completely complement the flawlessly competitive market.
Answer: Microsoft's stock faces a horizontal demand curve because the market for its stock is properly competitive, which means that P=MC =MR. Microsoft can sell all the units on the market at the market price to all of its buyers due to extreme competition that prevails in the market.
Answer: Based on the data given in the event, the only thing that hindered the demand for hearing aids was the effect of its price on the customer's budgeted income not included in insurance. This factor contributed an elastic demand in the market for hearing aids. However if the legislation regarding the insurance coverage is passed then your demand for hearing aids will increase considerably on the market. Alternatively the companies will increase the prices of hearing assist in the market to adopt good thing about inelastic demand prevailing in the market.
People below the age of 65 will find the marketplace situation very unfavorable. This is because their costs will never be included in Medicare public insurance and they will have to buy the hearing aids at full prices. Alternatively few companies operating in the hearing aid market will increase prices in retaliation to the medical public insurance coverage for citizens exceeding 65 years. This factor will multiply the impact of the medical law on the citizens below age 65, because their demand will become more elastic.
Answer: the individiual businesses and consumers cannot impact the marketplace price in the competitive market, therefore both are known as price takers in the competitive market. Both consumers and the organizations accept the marketplace prices as they are, and their actions will have no effect on the market price. The businesses in this market face a perfectly elastic demand curve becuase no one is willing to pay more than the market price for the firm's output. Similarly the consumers face a flawlessly elastic supply curve. This is because firms are not willing to market less than the market price to any consumer.
Macro financial influences include global monetary conditions, Inflation, technological change, interest rate fluctuations and domestic business cycle fluctuations. Example 1. A recession in japan caused demand for products in the economy to fall. Which means that consumers will now buy less products due to deterioration in their economical conditions. Example 2. A rise in inflation has pakistan has decreased the amount of spending throughout the market. This is becuase the purchasing power of a consumer is negatively afflicted by rising proces for products throughout the market. Example 3. An increase in the rates of interest has caused a decrease in spending in america economy. Which means that the citizens are now interested in saving money becuase borrowing money from banks will now be expensive as the rates of interest have increased.
Answer: X is a standard good becuase the quantitiy demanded of x is positively associated with the income factor. Therefore a rise in income will cause an increase in the number demanded of X. It isn't an inferior good becuase in case there is a substandard good the quantity demanded and income move in opposite directions, which means that a rise in come will have a negative effect on the quantitiy demanded.
X and Y are Substitutes. That is becuase the number demanded for product X is positvely related to the price of Product Y. Which depicts that an upsurge in price of product Y will cause a rise in the quantity demanded for X.
Y and Z are Substitutes. This is becuase X and Y are substitues and X and Z are complementary goods. As Z and X are complementary goods so a competitor for X will also be a competitor for Z. Hence proved that Y and Z are possible substitutes
Answer C: Steel and cars are complementary goods meaning an increase popular of one may cause a simultaneous upsurge in the demand for other. Inside the given case the price tag on steel is expected to fall, falling prices may cause an increase in the demand for steel. Alternatively a decrease in the steel prices will cause a reduction in the prices of cars, and the decreasing car prices may cause the demand for cars to increase in the automobile market.
Answer: Price elasticity of demand measures the responsiveness of the quantitiy demanded to the many factors that influence demand like the price of the product, price of substiute and complementary products, and the income of the consumers. Price elesticity of demand helps the managers to look for the impact of price changes on the revenues of the business enterprise. This decision is important becuase it helps the managers get a conscise view about the real elasticity of the product and aid them in making the decisions accordingly.
Answer b: A rise in the price of fresh juice and Shawerma is not a sufficient indicator to find out if the revenues will increase or not. Other factors like substiutes available, income of the consumers and the purchase price elasticity of demand needs to be determined to be able to get a clear view of the market for the restaurant. A rise in prices is only going to be profitable if the demand for freash juice and shawerma offered by the Lebanese restaurant is ineleastic. Therefore i disagree with the advice directed at my friend.
Answer: Total Revenue = P x Q = 50000 x 0. 1 = $5000
Total Cost = Fixed cost + Variable cost
= (1000+120) + (1200+2500+3000) = 1120 + 6700 = 7820
Profit = Total revenue - Total cost = 5000 - 7820 = (2820) Loss
Variable cost > Total Revenue (6700 > 5000).
Looking at the calculations above it is quite evident that the business enterprise is susceptible to make a loss in the coming months, but the point to be noted here is that business is not in a position to cover its variable costs in the short run. Let's assume that the marketplace for photoshop is properly competitive this means a company can operate as long as it covers the variable costs. So when the photocopy store struggles to cover the variable costs so that it is not advisable for Ahmed to open his business.
Answer: The companies average total cost takes into account both average fixed cost and the common variable cost, and is basically the sum of both average fixed costs and average variable costs. (ATC=AFC+AVC). Therefore a change in the costs ireespective to the fact that the AFC will not change may cause a shift in the common total cost curve. That is becase fixed costs are a part of total cost of production. Whereas in the case of marginal cost curve which is the price tag on adding yet another unit of output considers the variable factors of production such as labor. The fixed costs for adding any additional unit remain zero, this is becasue they may be fixed whether a firm produces additional units or not. Therefore, the fixed costs will have no effect on the marginal cost curve.
Answer: Marginal productivity of labor is the excess output made by employing an additional unit of labor. A rise in marginal productivity of labor by a noticable difference in technology can help the firm achieve economies of scale in the longrun. Which means that the improvement in technology may cause LONG HAUL Average Cost curve to shift downwards. On the other hand the marginal product curve will shift upwards. The upsurge in the gap between marginal product and marginal cost will raise the revenues produced by the business enterprise over time.
. Answer. Fixed costs are indirectly related to the price tag on goods manufactured and also have to be paid if the firm is making a profit or not. Higer fixed costs can be highly risky for automobile companies if they are not making sufficient revenues to cope with the total costs. High fixed costs imply that the business must sell more products to be able to break even at the point where MC=MR or Marginal cost = Marginal revenure
Answer: The decisions will be made acording to the expense of factors in both the countries. A capital intensive method of production will be utilized in case of England. In capital intensive method of production a big amount of capital equipment can be used relative to other inputs for production. This is because the capital is relatively cheaper to use in England as compared to labor. In case there is India where labor is relatively cheap and the capital is relatively expensive a labor intensive system of production will be implemented. In labor intensive method of production massive amount labor is employed in accordance with other factors of production. This system will be beneficial in india because labor is relatively cheaper when compared with capital.
. Answer: The Minimum Efficient Scale is the point where the long run average cost curves stop to decline, and any futhur increase in production will cause a rise in marginal cost of production. It is important for each and every individual firm because it can aid them in determining the optimum degree of production and can also help them indefining their limits. Following the MES the economies of scale is exhausted and diseconomies of scale occurs.