Washing powders are often heavily advertised because -Consumers need to know the exact composition of washing powders. -The advertising elasticity of demand of washing powders is low, so firms need to advertise a lot to increase sales. -The consumer bas
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Washing powders are often heavily advertised because
-Consumers need to know the exact composition of washing powders.
-The advertising
-The consumer base keeps changing.
-They are produced in an oligopolistic setting and are not search goods.
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- FRONT PAGE Pricing Disney+ Disney decided it wanted to provide streaming services directly to customers, rather than renting its library of films and television shows to other streaming services like Netflix. But how successful would a streaming service be? In other words, what did the demand for a "Disney+" streaming service look like? Disney knew that the number of subscribers would depend not just on the attractiveness of the Disney archives, but also on the subscription price. After doing some market research, Disney decided to launch Disney+ at a price of $6.99 a month (or $69.99 per year). When Disney+ was launched on November 12, 2019, 10 million people signed up on the first day-a resounding success! Source: News reports, October-December 2019. Suppose Disney+ changes its monthly subscription price from $7 to $9 per month. Graphically show the impact of this price change in the following markets: a. Popcorn, pizza, and other movie snacksExercise 5.5 In this unit we have seen that monopolistically competitive firms could increase the amount they produce and reduce the ATC of production. Why don't they?Economics You are a manager of a monopolistically competitive firm that is currently charging a price of $5 for its product and, at this price you are selling 52,000 units of your product. At this price and quantity combination, you have estimated your own price elasticity of demand to be -2.0 and you have an advertising elasticity of 0.25. What is the optimal amount for you to spend on advertising?
- Exercise A.6. Do monopolistically competitive markets normally have the optimal number of products?MIcro: The company “Mike Broonie” operates in the market of monopolistic competition. Just now, the company weekly produces and sells 100 units of pillows for £12 each. The average total cost to produce the pillows doesn’t depend on the output, being £10 per unit. Having evaluated the price elasticity of demand for its product, the company concluded that demand is inelastic at the moment. a. What indicator characterizes the price elasticity of demand? What formula (or formulas) one can use to calculate this indicator? Choose any number for this indicator that, under the conditions specified in the case, could characterize the price elasticity of demand for the company “Mike Broonie”. b. Imagine that the owner of the company wants to increase the price of the company’s product. How will it affect sales, revenue, and profit (will each of these indicators increase, decrease, or remain the same)? Give here theoretically substantiated forecast. To increase the number of points…(12) Suppose all firms in a monopolistically competitive industry were merged into one large firm. Would that new firm produce as many different brands? Would it produce only a single brand? Explain.
- Exercise 5.2 Why is the firm's demand curve flatter than the total market demand curve in monopolistic competition? Suppose a monopolistically competitive company makes short-term profits. What will happen to your long-term demand curve? Represent graphically.The Hevishus Corp. (HC) is a profit-maximizing company that owns the only cement factory in Charleston, South Carolina, and is the only seller of cement in that area; it also owns the only cement plant in Portland, Oregon, and is the only seller of cement there. 1. Its statistician-consultant has determined that the elasticity of demand for cement in Portland is -3.50 and in Charleston is -2.25, and HC has priced its cement in accordance with this information. In which city does it charge a higher price for cement? Explain. 2. The mayor of Portland has levied a $250,000 annual factory fee on any cement factory in the city. Though it is not happy about the fee, HC pays it and continues producing and selling cement in Portland. How will the fee affect the price of cement that HC sells in Portland? Explain.Refer to the Front Page to answer two questions. FRONT PAGE Pricing Disney+ Disney decided it wanted to provide streaming services directly to customers, rather than renting its library of films and television shows to other streaming services like Netflix. But how successful would a streaming service be? In other words, what did the demand for a "Disney+" streaming service look like? Disney knew that the number of subscribers would depend not just on the attractiveness of the Disney archives, but also on the subscription price. After doing some market research, Disney decided to launch Disney+ at a price of $6.99 a month (or $69.99 per year). When Disney+ was launched on November 12, 2019, 10 million people signed up on the first day-a resounding success!
- Cost and revenue The graph presents the short-run costs and revenue for a monopolistically competitive firm. Use this information to $800 Marginal cost Average total cost determine the profit-maximizing output and profit for this 750 firm in the short run 700 650 What is the profit-maximizing output of this 600 550 monopolistically competitive firm? Round your answer to 500 the nearest whole number 450 400 Demand 350 units of output 300 250 What is the maximum level of profits for this 200 monopolistically competitive firm? Round your answer to 150 the nearest whole number Marginal revenue 100 50 0 1 2 3 4 5 6 7 8 9 1011 12 13 14 1516 17 18 19 20 Units of output A2. During your next trip to the supermarket (or you may need to make a special trip) find two examples of different goods for which the market is oligopolistic. Make certain that you have chosen a ‘good’ and not a brand name. Remember that several brand names compete in a market. List all the brand names (or at least four brands if there are dozens) and the parent company for each brand name (check the package carefully so that you don’t confuse brand names with the actual producer.) For each good, what is your evidence that this market is oligopolistic? (number of producers; shelf space give to each one; identical pricing.)The setting is a Ralph Lauren outlet store, and the product line is Polo golf shirts. A product manager and the General Manager for Outlet Sales are analyzing the discounted price to be offered at the outlet stores. Let’s work through the decision at the level of one color of golf shirts sold per outlet store per day. The decision being made is how low a price to select at the start of any given day to generate sales at that price throughout the day. The demand, revenue, and variable cost information is collected on the following spreadsheet:Questions1. Identify the change in total revenue (the marginal revenue) from the fourth shirt per day. What price reduction was necessary to sell four rather than three shirts?2. Does this fourth shirt earn an operating profit or impose an operating loss? How large is it?3. What is the change in total revenue from lowering the price to sell seven rather than six shirts in each color each day? In what sense is the decision to sell this seventh shirt…