Week 4: Economic Analysis
Week 4 Economic Analysis
ECO/561
September 17, 2015
Economic Analysis
Market Structure
The business firm discussed in this report deals with general merchandise and operates in the retail industry. It specializes with the sale of general consumer merchandise including food products such as dairy foods, baked goods, meat and poultry, seafood and garden outputs; clothing and textile output, electronic merchandise and it also operates an optical center among other business operations. The market structure of this business is monopolistic. The external business environment is composed of several retailers who pose as competitors to the organization in the market (Stackelberg, 2010). Similarly, the market entry for general merchandise retailers is relatively. Due to the size of the organization, the company has a substantial control over the pricing scheme of its output; it has the capacity to shift the cost of goods either to its suppliers or end customers. This power is one that smaller retailers in the industry do not have. The organization differentiates its output through product testing tactics which makes the business clients to perceive brands as new and with improved value through redesigning packages and graphics; while in essence it may have been the same. Price Elasticity
Price elasticity is defined as a measure in the sensitivity of business clients or the supply of commodities as the pricing approach changes (McEachern, 2010). The significance of this value is that it analyzes the proportionate change in the output demanded after the prices of the commodities have been changed. In this business enterprise, the price elasticity is relatively low. Due to the wide range of products sold to its targeted business customers, the organization has been able to capitalize on its economies of scale. For this reason, while a product may have increased its selling price, its purchase levels may still be sustained since the cost
ECO/561
September 17, 2015
Economic Analysis
Market Structure
The business firm discussed in this report deals with general merchandise and operates in the retail industry. It specializes with the sale of general consumer merchandise including food products such as dairy foods, baked goods, meat and poultry, seafood and garden outputs; clothing and textile output, electronic merchandise and it also operates an optical center among other business operations. The market structure of this business is monopolistic. The external business environment is composed of several retailers who pose as competitors to the organization in the market (Stackelberg, 2010). Similarly, the market entry for general merchandise retailers is relatively. Due to the size of the organization, the company has a substantial control over the pricing scheme of its output; it has the capacity to shift the cost of goods either to its suppliers or end customers. This power is one that smaller retailers in the industry do not have. The organization differentiates its output through product testing tactics which makes the business clients to perceive brands as new and with improved value through redesigning packages and graphics; while in essence it may have been the same. Price Elasticity
Price elasticity is defined as a measure in the sensitivity of business clients or the supply of commodities as the pricing approach changes (McEachern, 2010). The significance of this value is that it analyzes the proportionate change in the output demanded after the prices of the commodities have been changed. In this business enterprise, the price elasticity is relatively low. Due to the wide range of products sold to its targeted business customers, the organization has been able to capitalize on its economies of scale. For this reason, while a product may have increased its selling price, its purchase levels may still be sustained since the cost