Given that equilibrium prices and profits of two retailers are known, consumers’ bias and the influence of the dealer costs on retailers’ pricing and profit condition will be discussed in four contexts: When a + b < 1 and c1 < c2, that is, consumers may like shopping in MCRs retail stores while costs of MCRs retailers are higher than that of Dotcoms retailers, MCRs retailers now have priority from aspects of consumers’ preference, and Dotcoms retailers are superior to MCRs in term of costs. a + b < 1, so k(b – a)(a + b – 1) < 0; c1 < c2, so c1- c2< 0. Therefore, p1 – p2 < 0 must be true, so equilibrium price of MCRs retailers is higher than that of Dotcoms retailers.
Only when c1- c2 > a critical value k(b − a )( a + b− 1) can MCRs
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When a + b > 1 and c1 < c2, both MCRs retailers and Dotcoms retailers have superiorities from aspects of consumers’ preference and costs. a + b > 1, then k (b − a )( a + b− 1) > 0; c1 < c2, so c1- c2< 0. When c2- c1 > a critical value k(b − a )( a + b− 1), equilibrium price of MCRs retailers is higher than that of Dotcoms retailers; when c2- c1 < k(b − a )( a + b− 1), equilibrium price of Dotcoms retailers will be not as high as that of other retailers.
Under this occasion, ᴫ_1- ᴫ_2<0 must be true, Dotcoms retailers since the former retailers are more superior to MCRs in terms of equilibrium price and costs, and profits that Dotcoms retailers achieve are more significant. When a + b > 1 and c1 > c2, Dotcoms retailers has superiority in consumers’ preference while the opposite retailers have priority in term of costs. a + b > 1, then k (b − a) (a + b− 1) > 0; c1 < c2, so c1- c2> 0. Therefore, p1 – p2 > 0 must be true, that is, equilibrium price of Dotcoms retailers is higher than that of MCRs retailers.
Based on above analysis, it can be concluded that consumers’ preference, business costs have great impact on retailers’ pricing behaviors and profits; besides, the two factors directly determine price dispersion rate between two retailers.
However, most consumers of China do not trust e-commercial retailers since e-commerce market still has a rather shorter history in China. Most researchers found out that prices of most Dotcoms
In a day of, “I want it now and I’m willing to pay for it,” a shopping center has to offer a variety of stores, and also have several options. The shoe shopper will go to the place with 5 shoe stores before they go to the place with only 1. They may not realize that of the 5 available shoe stores; only 1 is in their price range, but satisfying a wider variety of consumers will help the mall broaden the shopper’s experience. But it is important to remember that shoppers are price sensitive, so not only do you need a variety of stores offering a variety of products, but you also need to be able to provide a variety of price points so you don’t limit your shopper demographics.
Ans: Because the TV and DVD are complementary goods, TV prices fall so that the increased demand for DVD. Increased demand caused DVD equilibrium prices, the equilibrium quantity increases, as shown in Figure 4-9.
At point F a monopoly firm attains equilibrium producing OM, output at OP, price. OP competitive price is less than OP, (OP < OP,) and OM competitive output is greater than OM, output (OM > OM,).
At the price of $5.00, the quantity supplied equals the quantity demanded. At a price of $7.00, the quantity demanded is 120 greeting cards and the quantity supplied is 160 greeting cards. There is a surplus of 40 greeting cards a week and the price falls. As the falls, the quantity demanded increases, the quantity supplied decreases, and the surplus decreases. The price falls until the surplus disappears. The market equilibrium occurs at a price of $5.00 and 140 cards a week so the price falls to $5.00 a greeting card.
see that many brands are competing for shelf space and market share. Even though the
Kathleen Byrne Market Equilibration The understanding and maintenance of the market equilibration process is necessary for a business manager. It is also necessary for the business manager to also understand the supply and demand principles. Supply and demand principles serve as a useful model for business manager’s to analyze the competitive market. It also illustrates how buyers and sellers interact in various business situations. Buyers and sellers will come to a point where they both agree on price and quantity. When this occurs, the point of intersection of supply and demand creates the point of equilibrium. The point of equilibrium can also be called the efficient markets theory. The efficient market theory explains how the equilibrium price is the price where the quantity demanded matches the quantity supplied. A business manager can determine how the markets react to the prices of the supplied product, by matching or combining the supply and demand curves. The example I have chosen to review is the market for the Beanie Babies toy before and after they became popular. During the nineties there was a rage amongst adults and children for the popular plush toys called Beanie Babies. This toy beat out sales of all other toys during this time period. At times, the demand for them outweighed the supply with over six dozen different beanbag animals to collect
The widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $30, $29, $20, $16, and $12. Five buyers are willing to buy one widget at the following prices: $10, $12, $20, $24, and $29. What is the equilibrium price and quantity in this market? Equilibrium price is $20 and the quantity is 3 units.
A) an increase in equilibrium quantity and uncertain effect on equilibrium price. B) an increase in equilibrium price and quantity. C) a decrease in equilibrium price and increase in equilibrium quantity. D) a decrease in equilibrium price and quantity. 10) On September 3, 2003, Universal Music Group announced plans to reduce the wholesale price of music CDs it distributes by an average of 2530 percent. All else constant (i.e., ignoring the effects of file-sharing programs), how would this change affect the retail market for new music CDs? 10) ______ A) The supply of CDs would increase, causing equilibrium price to decrease and equilibrium quantity to increase. B) Demand for CDs would decrease, causing equilibrium price and quantity to decrease. C) Demand for CDs would increase, causing equilibrium price and
However, the four distinct types of retailers within the dollar store retail segment (original dollar stores, close-out retailers, limited assortment grocers, and extreme-value retailers) all compete on price. Dollar General is very competitive in this regard, but this alone has not rendered the company successful; price is not Dollar General’s competitive advantage amongst its competitors. Therefore, a
Current research suggests that specialty retailers are seen as more desirable to German consumers and are also more profitable than traditional retailers that are less focused in
In this particular assignment, I will use the regression results and the other computations from the previous assignment in order to determine the market structure in which a low-calorie frozen, microwave Food Company operates. Easy Living Foods is the leading competitors in the industry and it will be very vital to note their pricing strategies, profitability and their relationships. The market structure has been found to be perfectly competitive hence QD=QS. It is therefore very substantial to set an optimal price using this particular scenario. Therefore, we come up with the regression equation which is derived as QD = 20,000 - 10P + 1500A + 5PX + 10 I (Buteux, 1963).
Producing a product and making it available to buyers requires building relationships not only with customers but also with key suppliers and resellers in the company’s supply chain.” (pg 304) It is important that we come up with creative ways to try to keep the market balanced “It is essential that different firms in the same business not attempt to compete on exactly the same variables. If they do, competition will invariably degenerate into price—there is nothing else that would differentiate the firms.” (Perner)
We consume a large volume of goods every day, whether that be edible goods, disposable goods or items we are going to keep for a long time. The point is that we as a nation spend billions of pounds in shops every year and it keeps on growing. Larger stores like the supermarkets and department stores are benefiting from this because they are able to offer a wide variety of goods. Smaller stores however are suffering because they cannot compete with the larger stores in terms of variety and price. In this document I am going to explore the view that the choices we make when purchasing goods produces winners and losers in a consumer world.
This diagram shows that with a higher starting point the equilibrium point was reached sooner and therefore eased the supply problem that the initial product launch had.
Thus, marketing executives have to make a decision if the target market demands a high ticket product in which the firm is capable of demanding a higher price and placing on the market lesser quantity or the economy could dictate a reduced service or product. Hence, surrendering a little margin of revenue to produce a larger number of transactions appears as if this is the best path. Nonetheless, this is a fragile set of scales in which it is crucial that a business mull over the manufactured good, market demand, and the cost set by competition as the firm decides on a final price, Perreault, et al, (2009).