Essays on Microeconomics

Introduction

For understanding how the corn industry and the industry of water, I have interviewed with the marketing professionals from these two industries. Considering that marketing departments monitor the demand conditions, they can give us adequate information about their market.

Interviewer: What type of industry are you operating in? Marketing Professional 1: Producing corn requires using large lands, machinery, and knowledge of cultivating corn. Therefore, a company needs to have a high amount of financial resources to enter this market. Also, producing corn requires having the scientific knowledge for agricultural production. Changing climate and worse environmental conditions force us to ...

Introduction

The Internet as one of the most important factors of globalization determines the characteristic features of the latest development. If previously in developed client-oriented economies in the face of fierce competition, the winner was the one, who better and deeply met the needs of consumers, but today these two key parameters were supplemented by the speed in all variety of its determinations. This is the ability to show ads more quickly and more prominent position than its competitors to respond to a client request faster, promptly accept and process an order, deliver faster, etc. If the user goes to ...

[Student ID number and intake number] of the

POSTGRADUATE DIPLOMA IN BUSINESS ENTERPRISE

Southern Institute of Technology 2016

List of Tables 3

Section 1. Introduction 4 1.1 Purpose of the proposal 4 1.2 Research Aim 4 1.3 Research Questions and Objectives 4 1.4 Research hypothesis 5 1.5 Background and overview of business 5

Section 2. Literature Review 6

2.1 Introduction 6 2.2 Micro and Macro-Economic Indicators and Business Confidence 6 2.3 Recent Trends, Strategies and the Market Potential 7 2.4 Consumer Preferences 8 2.5 Conclusion 9

Section 3: Methodology 9

3.1 Introduction 9 3.2 Secondary Research Method – Literature Review 9 3.3 Case Study 10 3.3.1. Research Design 10 3.2.2. The Sample 11 3.2.3. The Process 11 3.5 ...

Demand function (QD) = -5200 - 42P + 20PX + 5.2I + 0.2A + 0.25M Where; P= 500, PX=600, I=$5,500, A=$10,000 and M=5,000

Replace values in the equation;

QD = -5200 - 42(500) + 20(600) + 5.2(5,500) + 0.2(10,000) + 0.25(5,000) = -5200 – 21,000 + 12,000 + 28,600 + 2,000 + 1,250 = 17,650 Price elasticity of demand = ∂QD∂P×PQD ∂QD = change in quantity demanded, ∂P = change in price; P= price, QD = quantity demanded ∂QD∂P = -42 QD= 17,650 P= 500 Price elasticity of demand = -42 ×50017,650 = -1.1898 The above elasticity indicates that the product’s quantity demanded ...

American Public University

1. Compute the elasticities for each independent variable. Note: Write down all of your calculations. QD = - 5200 - 42P + 20PX + 5.2I + 0.20A + 0.25M and Q = Quantity demanded of 3-pack units P (in cents) = Price of the product = 500 cents per 3-pack unit PX (in cents) = Price of leading competitor’s product = 600 cents per 3-pack unit I (in dollars) = Per capita income of the standard metropolitan statistical area (SMSA) in which the supermarkets are located = $5,500 A (in dollars) = Monthly advertising expenditures = $10,000 M = Number of microwave ovens sold in the SMSA in which the supermarkets ...

The Impact of the Theory of the Consumer Choice on Demand Curves, Higher Wages and Higher Interest Rates

The theory of consumer behavior shows how the choice is affected by the price of goods, income and preferences, and the way buyers maximize their net gains from the purchase of goods and services. The price change of a good affects the consumer demand structure in two ways. Any change in the price results in the appearance of the income and substitution effects, as it changes the amount of available goods and their relative prices. The above effects are consumer reaction to changes in relative prices and real income (Mankiw, 2014). The substitution effect is the change in the ...

American Public University

1. Compute the elasticities for each independent variable. Note: Write down all of your calculations. The demand estimation as follows: QD = -3,500 - 150P + 30A + 75PX + 10Y. When P=300, A=750, PX=200, and Y=10,000. Placing these numbers into equation: QD=-3,500-150(300)+30(750)+75(200)+10(10,000)=QD=-3,500-45,000+22,500+15,000+100,000=89,000. Under given these numbers, we have 89,000 products demanded. Price elasticity of demand is [d(QD)/d(P)]/[QD/P]. Therefore, we take a derivative of the function subject to price, and we assume other variables do not ...

The term "demand" in economics means payment need, i.e. need that the subject is able to pay. From this definition it follows that the demand for a particular commodity (service) depends on the price. This means that the increase in commodity prices will lead to a decrease in demand, and, conversely, a decrease in prices will lead to higher demand. The relationship between price and quantity demanded is stable. (Agarwal, 2013) The cause of the change in demand is change. This reverse causal relationship between price and quantity demanded is the law of demand. The law of demand manifests ...

Question 1:

Suppose you are given the following: At output level of 6, what will be the marginal cost? Less than 2 Exactly equal to 2 More than 2 Given information is not enough to find out marginal cost Why is this? Question 2: What explains the U-shape of the AC curves in the short and the long run? Shapes of both, short and long run AC curves, are explained by the law of diminishing returns Law of diminishing returns explains the long run AC curve while economies and diseconomies of scale explain the short run AC curve Law of diminishing ...

The Impact of the Guaranteed Price Policy on the European Sugar Market

Sugar industry is one of the most dynamic in the structure of the food industry and plays a significant role in the economies of several countries. The European Union leads the five largest importers of sugar. Sugar production in the EU is expected to grow by 10% in the 2017/18 season. The production may reach 18.3 million tons, but still will be lower than the record 2014/15 season (19.4 million tons). Sugar production growth is expected in France (up to 5.5 million tons) and the UK (up to 1.4 million tons). However, despite the increase in production, the EU ...

Question 1:

The five core competencies that are discussed and broadly tackled in the MBA program are as follows: Competency 3006.1.5: Legal and Regulatory Requirements Competency 3020.1.4: Motivational Concepts in Human Resources 3012.1.4: Microeconomic and Macroeconomic Principles 3013.1.4: Marketing Strategy 3014.1.1: Financial Analysis The graduate in these core competencies of the MBA program is taken through the rules and regulations as well as the legal procedures that they should be privy to, so as to analyzes applicable legal and regulatory requirements of their organizations and assist them to determine whether organizations meet legal responsibilities or not. The graduate in this competency ...

The coffee industry in developed countries is traditionally perceived as prosperous and stable. Also, the coffee business grows in developing countries, but this stability is apparent. Fluctuations of minimum coffee prices create serious difficulties for countries, which economies are directly dependent on coffee production. It happened that coffee sector in Mexico faced the crisis due to the evanescence of control tools, the decrease of prices, the insolvency of numerous local and global exporters, the shortage of loans, and the removal of the government from the coffee segment changed the situation in the industry (Renard, 2010). Before the crisis many ...

Analysis of Tesla Motors

Analysis of Tesla Motors

Introduction

Organizations must use any strategy that will enable the organization to stay competitive and to also learn about any processes within the organization that could be changed in order to increase proficiency and efficiency. One such process is a critical analysis of the microeconomic and macroeconomic environment as well as any challenges that the organization may be encountering. This essay will perform an analysis of Tesla Motors to include the history of the organization, organizational regulations, factor markets, global pressures and foreign competition, cost structure, economies of scales; a critical analysis, practices of economic theory ...

Final Assignment (Microeconomics)  

Consumer goods are products purchased to meet personal needs of consumers, family and household consumption. Consumer products with regard to the nature of consumption (the degree of durability) can be durable goods (i.e. used for a long time (cars, refrigerators, cell phones, furniture, TV sets)); and non-durable goods (i.e. consumed immediately (bread, cigarettes, drinks) or in divided doses (soap, toothpaste, washing powder), including disposable goods (once consumed) and services (the object of sale in the form of actions, benefits or satisfaction)) (Krugman and Wells, 2012). Consumer goods cannot be used for industrial production, since they do not have the ...

Introduction

Can colleges and universities increase their tuition rates continuously, despite the suffering they cause students? This issue can be and has been tackled by economics – specifically; we can use the tools offered by the study of price elasticity of demand to see what colleges take into consideration before raising their prices. The reaction of students to the increasing tuitions and other expenses might be a driving force on the demand side for higher education. If the students believe that higher education’s high costs will not create a value equal to or less than its cost, they might prefer ...

Introduction

The general outcomes of the Middle East and North Africa (MENA) labor market have remained lower despite the region recording a positive economic growth. The improvements in the MENA labor markets experienced in the last one decade are negligible. Many factors influence the success of labor markets in the world. Factors such as the rate of unemployment, occupational choice and sector allocation, participation rates in different economic activities, and wages are important indicators of the economic position and success of a labor market. However, the MENA labor market continues facing economic segmentations because of the poor wage structure and ...

Executive Summary

Third party providers of proposition player services are a nascent, but a highly promising segment of the United States gambling business industry. There is much strong evidence suggesting that the number of casinos and other gambling establishments in the country is dynamically increasing. Thus, the importance of providers of third party proposition player services will be increasing simultaneously. At the same time, the practice shows that there are serious human resources problems in this area. In particular, the employee turnover rate in this industry is unusually high, sometimes reaching 35%. This research proposal provides a comprehensive introduction into the ...

The impact of availability of skilled labour force Manpower is the most important element of the productive forces. The demographic factors are function of socio-economic development and have a great influence on economic growth. In assessing the impact of population dynamics it is important to take into account not only total population and population growth, but also its age structure, field employment, level of education and training, i.e. quality of the labour force. The availability of skilled labour force is the prerequisite of economic development of the country. The quality of labour resources largely contributes to enhancing overall economic ...

Suppose that there are two products: clothing and soda. Both Brazil and the United States produce each product. Brazil can produce 100,000 units of clothing per year and 50,000 cans of soda. The United States can produce 65,000 units of clothing per year and 250,000 cans of soda. Assume that costs remain constant. For this example, assume that the production possibility frontier (PPF) is a straight line for each country because no other data points are available or provided. Include a PPF graph for each country in your paper.

What would be the production possibility frontiers for Brazil and the United States?

Without trade, the United States produces ...

Introduction

In simple terms, imperfect competition can be referred to as a type of market structure that does not operate in conformity with the laid rules of perfect competition. In imperfect competition, there are so many barriers that prevent fair competition among the market players and also the accessibility to goods by users is limited and not all transparent. Limitations and barriers to such a market may include: prices being influenced by one or a few suppliers, barriers to the entry and exit of a market are quite significant and information about products and their pricing is very limited. Examples ...

Healthcare Economics is a subset of economics that focuses on how societies produce, distribute, and consume health and healthcare. Since its inception, healthcare economics has been concerned with the efficiency and effectiveness at which individuals and governments value health and health-related products. The discipline acknowledges the numerous stakeholders in healthcare, among them patients, their families, physicians, nursing staff, governments, and educational institutions (Kotsopoulos and Connolly, 2014). This discussion compares macro-and microeconomic healthcare conditions concerning their impacts on patients from a nursing perspective. On one hand, microeconomics emphasizes on the individual and communal economic activities. Conditions under this branch fall ...

Consumer’s choice is the ability of a given person or simply the buyer of a given good or service to determine what to use or purchase concerning products and services (Mankiw, 2014). There are several reasons behind any consumption habit by an individual. These include the prices of a given commodity, the level of income of the consumer and the utility as well as the technology at hand that characterizes the dynamics notable in the individual’s mode of purchase and use of a given commodity (Mankiw, 2014). According to Taylor& Greenlaw (2014), change in the prices of ...

There are some grounds for the government involvement within a market. In a free market, the government has the duty to provide goods and services that have a low-profit margin but a very high social margin. These public goods and services include social infrastructures like highways and bridges, roads, and hydroelectric projects. The government should be concerned with availing such goods because these services are a vital part of the growth of the economy, and private investments do not typically invest in such ventures because they are not profit generating ("Econmentor.com - Role of government in a market economy," ...

Abstract

Given the importance of human resource economics to address labor utilization together with its implications for the greater economy, the accumulation of human capital is one of the major related topics. Human capital collection greatly drives the instrumental economic considerations such as unemployment, employment turnover, and the functions of both the labor unions and government policies. Unlike most of the resources that depreciate with time, investment in human capital increases in appreciation and continually exploits the available resources. Although it may consume time, it ensures effective use of qualities and skills while enhancing other resources. The human resource plays ...

Introduction

Can colleges and universities increase their tuition rates continuously, despite the suffering they cause students? This issue can be and has been tackled by economics – specifically, we can use the tools offered by the study of price elasticity of demand to see what colleges take into consideration before raising their prices.

Let us assume that, in an attempt to raise more revenue, New York State University increases its tuition rates. Will this necessarily result in more income for the university? Not always. As we know, revenue depends on price and quantity of the demanded good or service. In the ...

Credit demand, as well as, credit supply have been mentioned as primary contributing factors to economic decline. Credit supply culminates to increasing production costs, as well as, causing the short-run shifts in the aggregate supplies. This credit supply will as a result cause high inflation and lowering of the GDP leading to economic decline. Credit demand, on the other hand, leads to decreases in the bank lending consequently leading to low investments because of the higher interest rates brought about by the high credit demand. This would adversely affect the performance of the economy because of low investment levels. ...

American Public University

There are three mainstream economic systems: 1-Traditional economies, 2-Command economies, and 3-Market economies (Hipple, 2016). Each system has different characteristics, and it is not possible to classify the economies in the three economic systems in particular borders. The economies might carry certain features from the various economic systems (OpenStax College, 2016). The traditional economies are driven by the traditional life principles. The main production activity is agricultural production, and many of the companies belong to the families. The traditional rules have the highest level of importance in the traditional economies. Due to the traditional living, innovations do not receive ...

Background

The external economic environment in which a business operates has a great impact on its performance. The economic environment consists of several external factors in a business market. In a similar connection, the broader economy can also influence a business. Economic environment can be divided into the microeconomic environment and macroeconomic environment. As far as microeconomic environment is concerned, it affects business decision making such as individual activities of firms and consumers. On the other hand, macroeconomic environment affects the whole economy and all of its stakeholders. Many economic factors have external limitations on the business and organizations always ...

Abstract

Market structure refers to the interaction between various buyers and sellers. Different market structures have different characteristics. The characteristics of the market structure determine the realized outcomes. There are three main market structure: perfect competition, oligopoly, and monopoly. Perfect competition has many sellers. Therefore, they do not have any market power. They cannot influence market outcomes. An oligopoly has few firms with some market power. They can influence the outcomes. Monopoly comprises of only one firm with absolute market power. Therefore, it can influence the realized outcomes. This paper highlights the characteristics of the various market structures. It then ...

Abstract

In most economies, the resources are scarce and limited which calls for proper planning and allocation of the limited resources. Economic operations of a particular region are represented in the circular flow of income, whereby various sectors of the economy are represented. In the flow, all the players have their specific roles to enhance the optimization of the resources available. As enterprises and firms are going global, there are benefits and costs associated with the move, which calls for planners and economists in the enterprises undertaking the move to analyze the world market consciously. In this article, various economics ...

Identify two microeconomics and two macroeconomics principles or concepts from the simulation/ video. Explain why you have categorized these selected principles or concepts as microeconomics or macroeconomics. The main concepts displayed in the video are the law of supply and law of demand. These concepts are common to microeconomics and macroeconomics. Law of supply is a positive relationship between quantity of goods and services and its price. When price of a good rises, the quantity supplied of the good increases accordingly. With much higher price producers are willing to supply more goods and services. Law of demand depicts negative ...

The Determinants of Bank Performance in Kuwait

Abstract The aim of this paper is to determine the measures of banking sector profitability of Kuwait and then see the impact of internal and external determinants on the performance of the banking sector of Kuwait. Several variables are used to measure the performance of banking sector in this study, the impact microeconomic and macroeconomic determinants will be analyzed with relation to Return on Assets (ROA) and Return on Equity (ROE). However, answering the research questions will help in the selection of independent variables. It has been planned qualitative, and quantitative both research analysis techniques will be deployed for ...

Abstract

Wesco International Inc, which is an American publicly traded company currently, operating in the U.S. The company supplies electrical and repair products and is based in Pittsburgh, Pennsylvania. Most of the company’s business is conducted in the United States. This article provides a microeconomic analysis by reviewing the current demand and supply situation of the company as well as the involved costs of production and recommended strategies that the company could adopt to gain a competitive power.

Introduction

Maintaining successful operations is a hard task for multinational corporations especially in the current market trends and fluctuating customer demands. However, ...

BUSINESS STUDY REPORT:

This report is devoted to the YEO’s Beverage Company. The report has four main parts. The first part is an introduction where the general information about the company, the environment where it operates and its main competitors are presented. The second part is microeconomic analysis. The factors of production and its cost structure are examined there. The third part macroeconomic analysis where macroeconomic environment in which the business operates are discussed. The forth part is the analysis of sustainability and the impact of business operations on the environment. At the end of the report, there is a conclusion ...

Economics is an important discipline that concerns an individual’s daily activities. However, as much as the importance of economics to the people and the daily lives of individuals, it can be considered to have been influenced by other disciplines. Economics is a vast discipline that covers a lot of aspects that are important. As a result, the wide scope of knowledge covered by economics comes from multiple disciplines that are studies. Political science can be considered as one the discipline that influences economics largely (Malthus, Donald Winch, and Patricia James 194). Economics covers a wide scope of knowledge ...

Changes in Market Equilibrium

The interaction of the forces of demand and supply determines the equilibrium price and quantity in a perfectly competitive market. A market is in equilibrium when no buyer or seller has any incentive to the change in the commodity that he or she buys or sells at the given price. The equilibrium price of a commodity is the price at which the quantity demand of a commodity equals the quantity supply and the market clears. The process by which the equilibrium is reached is shown by the intersection of the demand and supply curve of the commodity.

Summary of the Video

The video " ...

One of the largest issues that a company faces is when their brand grows stagnant. This has happened to many well established brands all over the world and it is up to the marketing team in order to ascertain what would prospectively be the best option to consider when looking into how to redevelop the brand. Some factors that can cause the brand to grow stagnant are: lack of attention to the global sustainability initiative, branding that is old and dated, and competition that is using a fresh strategy that highlights that corresponding brand in a negative light. A ...

The economy is defined as the enormous set of interconnected consumption activities and production that help in identifying how the scarce resources are being allocated, thus, this definition is also known as the economic system. There are various contributing factors that make economy, one of the most important function of every nation. This is a representation of how well a country is when it comes to managing the country’s business as a whole. Economics is divided into two major branches. One is the Macroeconomics and the other is Microeconomics. The first branch refers to the study of a ...

Study

CONTENTS

Introduction 3

Question 1 – Market Structure Definitions 4 Question 2 – Unique Resources of Quasar Computers 5 Question 3 – Oligopoly and Competition 6 Question 4 –Porter’s Generic competitive strategies for different types of the market 6 Question 5 – Porter Five Forces Ranking and Attractiveness of Perfect Competition for Computer Industry 8 Conclusion 9

References 10

Introduction Throughout the history of the humankind, different markets have been tested by the economies (Frank, 2008). Despite the fact that advantages of ones and deficiencies of others types of market have been respectively eulogized or vigorously criticized by the different scholars, the practice ultimately revealed that ...

Introduction

Since the mid XX century, the oil industry occupies a leading position in the global energy sector. A prerequisite for the implementation of large-scale long-term investments in the oil industry under the condition of a favorable outlook for oil demand in the world market is the availability of relevant geological reserves of oil in a particular region and the world at large. OPEC-countries account for over 40% of world oil production. Especially, the Middle East, particularly the Gulf basin, where there are the largest oil fields in the world, is rich for oil reserves (OPEC, 2015). Oil is extracted ...

Abstract

The Eden Hotel Apartment project is a new service apartment concept for central Dublin. Dublin and Ireland as a whole are experiencing a resurgence in economy; with this resurgence has come the desire and market demand for more service hotel options in the city. This document includes the concept proposal associated with this particular project as well as market analysis, partnership information, and financing information that is prescient for the market this project would enter into in the city of Dublin. Financially, designing and implementing a service apartment project is a large task, but the foundational basis for this ...

Abstract

The O’Hub is a conceptual, up-and-coming hostel that will be located in the heart of Dublin. Dublin has long been a center of tourism for people around the world, and it seems likely that Europeans and international guests will continue to flock to the city (Failte Ireland, 2016; Bacon, 2009). Indeed, there have been suggestions that the hotel and hostel industries in Dublin are over capacity; this indicates that there is a need in the market. The overarching vision for this particular project is to create such a unique design and atmosphere that the O’Hub is able ...

Production of goods and services is one of the core and fundamental aspects that relates to companies and organization. Organizations aim at making profit and this would only be achieved through proper production of goods and services. It is the wish of every organization to produce as much as possible in order to meet the demand that exist in the market but several factors act as obstacles to wards this. One of the major things that deter effective production is the scarcity of resources for production such as raw materials that are essential for the production process. When we ...

Introduction

Strategic interdependence is the primary feature of an oligopoly market form. In our previous analysis we found that our microwaveable frozen food company is an oligopolist. Thus it is very important for the firm to constantly upgrade its strategic decisions based on the market and economic conditions. The firm has to combat the challenges that come its way with effective counter moves. The managers have to be prepared for any changes. It is also important to keep close watch on the economy to make an estimate of the possible changes. In this analysis we discuss how the frozen food ...

The simulation of Khan Academy Video on changes in the market tries to explain how shifts in demand and supply have an impact on the market equilibrium. Decision making and quantity are some of the examples depicted in the Khan's video. The information presented in this video is related to current professional companies and products in the real world. Each shift in supply or demand is seen to bring an impact on the general equilibrium (Baumol, 2009). In the simulation, a single rational product is picked to view the principle of microeconomic theory. Assumptions are made when shifts of ...

The table below shows the costs and revenue structure of a firm :

Let us present the cost and revenue graphically as shown below: The table showing total revenue and profit is given below: 3. From the graph we can see that the profit maximizing level of output is 4.5. It is the point where the marginal cost (MC) curve cuts the marginal revenue (MR) curve . From the table above we can see that the maximum profit is $126. 4. Normal profit is included in the total cost of the firm. So when profit is 0 we say that the firm earns normal profit. When the profit figure is positive the firm ...

Article Review

Article Review

The motor vehicles industry in Mexico is facing a jolt due to the fall in demand from Europe, Latin America and Asia. The economic slow-down in these areas have reduced demand for cars and light trucks whose production has fallen by 4.1% in February this year from the previous year. But there is the brighter side as well. Though the world outside North America is under recession the USA is experiencing robust growth with the job market faring quite well. This is reflected in the 75 per cent of export of the auto industry of Mexico finding ...

Introduction

The law of demand tells us that there is an inverse relationship between price and quantity demanded. That means if a producer reduces the price the demand for the product will increase and vice versa. But just knowing the inverse relationship is not enough for a business firm. It is more important to know the extent to which the demand changes with the change in price. Thus price elasticity of demand is an important tool to decide upon the appropriate pricing strategy. In this paper we are going to present the concept of price elasticity of demand, how it ...

The study of Health Economics encompasses the application of several tools of microeconomics like demand, and the theory of cost regarding health issues (Santerre & Neun, 2009). However, the main objective of studying health economics is to encourage proper understanding of the various economic aspects of health care issues. Therefore, the analysis of microeconomic knowledge is important while conducting a thorough economic healthcare study. Consequently, the management of the hospital should not worry if they lack some macroeconomic backgrounds regarding the provision of healthcare facilities. The paper assists Sunnydale in applying some theories of microeconomic concerning health economic issues; hence, ...

Introduction

A firm well established in the market with impressive revenue returns and profit cannot consider its challenges to be over. A firm has to long-sighted in planning its operation strategies. A firm has to face a number of changes in its exogenous environment. Such changes can be brought about from a number of sources. There can be increased competition from entry of other firms into the industry. This entry can eat upon the profit of the incumbent firms. Government policies related tax, subsidy and market control also affects the firm. Even the policies related to foreign trade can affect ...

Effective product promotional campaigns have a positive impact on the consumers’ preferences for the product. In our example when a celebrity is promoting the grill products of a particular brand the marginal utility will increase resulting in an upward shift of the marginal utility curve. The news clip on beef prices suggests that the beef prices are sky-rocketing due to a number of factors. Let us discuss the implications of this increased price on the relevant sectors of the economy.

Income and Substitution Effect

As the price of beef increases the purchasing power of the consumers decrease as their money income remains the ...

The Question

The global financial crisis has caused a structural breakdown in all the parts of the economy. The primary influence has been on the behaviors of the consumers, and the consumers are comparatively more risk averse. This situation might support the recession and its negative influences on the economy.

The Relevant Facts and Circumstances

The most recent global crisis has caused important losses for the consumers including their houses because they could not afford to pay the mortgage loans back to the banks. The crisis started in the sub-mortgage markets have widened to the other financial sectors and the real sectors. Consequently, the American economy ...

Introduction

Knowing the market is very important for a firm as it has to base its policies and profit maximizing decisions based on the market characteristics. In a perfectly competitive market the firms follow the price determines by the industry. On the other hand a monopolist sets the price and quantity based on the profit maximizing conditions. The monopolist earns higher profit than the firm under a competitive sitation. In a monopolistic competition the firms have to innovate so that the products can be differentiated from the products of the consumer. The oligopoly form of market is characterized by the ...

American Public University

Microeconomics is a sub-discipline in economics which uses analytical analysis and math heavily in the theorems. I have searched a little about this course by taking the other students' experiences who took this class before, and I read about the course on the online resources. I figured out that for developing a relatively better learning performance in this course, I need to renew my information about mathematical methods such as calculus of variation and drawing and reading graphs. Another important point in learning microeconomics is to understand the economic concept. Consequently, I realize that understanding microeconomics mainly depend on ...

Introduction

The strategic planning for the successful operation of a firm pivots on the market structure in which the firm operates. The market structure determines the market power that the firm possesses or can command into. If the market power is low or absent as in case of a competitive market the firm has to follow the industry determined price. But if the market power is high as in the case of a monopoly the firm can earn substantial amount of profit by its pricing strategies. In the previous exercise we had derived the price and output of a firm ...

The article in the Economist (n.p.) is presenting the Walmart, global known actor for low prices in supermarkets, with employing a workforce around the world and the largest company measured in his revenue. The building of the firm focused on the lowering the costs that can bring competitive advantage for the firm and business. The firm has raised the hourly payment for its workers that has been known to be lower than from its competitors. They have raised the wages at one third higher that the federal minimum wage. Based on the report that was a marketing step and ...

Introduction

The market structure in which a firm operates determines the strategies that the firm should follow to maintain steady growth in revenue and profit. The market structure influences the pricing decision and also the decision to innovate and diversify in the product. The sales promotion activities are also a great deal dependent upon the market structure in which the firm is operating. To know the market structure we have to understand the degree of competition existing in the market. If there are a large number of firms producing similar products and none of the firms have the power to ...

Introduction

Price discrimination is a strategy usually followed by a monopolist or even oligopolist where different consumers are charged different prices. Price discrimination can take three major forms, first degree price discrimination, second degree price discrimination and third degree price discrimination. In this paper we demonstrate how third degree price discrimination is practiced by the Airlines. We begin with a brief description of third degree price discrimination in the next section. In section III we discuss the methodology and data source of our research. In section IV we present the outcome of our research. Section V concludes the study.

Concept of Third Degree Price Discrimination

In ...

There can be three pricing models that can be applied to pricing for airline services.

The peak pricing model : A high price is charged at the peak time when the demand for the good or service is high and a moderate and low price is charged in the off peak hours .

Price Discrimination: Different prices are charged for different group of consumers .

Cross subsidization: One group of consumers pay a price higher than the cost of service another group pays a price lower than the cost of service. The first group is the subsidizing group and the other group is the subsidized group.

We choose one flight and discuss which pricing principle will be applicable for that flight.

The Monday Morning Flight from Chicago to New York: This is a case where the peak pricing principle can be applied. ...

Introduction

Price elasticity of demand can be defined as the degree of responsiveness of demand to the change in price of the product. Mathematically it is the percentage change in quantity demanded produced by 1 percent change in the price of the product. It is ratio of the percentage change in quantity demanded to the percentage change in the price . The knowledge of the elasticity of demand is quite important for various purposes. The business firm needs to know the elasticity to effectively set its price. The government should also have the knowledge of the elasticity of demand to know ...