CHAPTER 10: MARKET POWER AND PRICING STRATEGY Introduction We have examined how firms with market power can generate positive economic profit by influencing the price at which their products or services are sold. This conclusion was based on the assumption that firms must charge the same price to all customers. Now we explore alternative pricing strategies and show that when a firm with market power can “discriminate” among customers‚ additional surplus (beyond that achieved by a single-price
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PERFECT COMPETITION Short Run Equilibrium of the Firm Under Perfect Competition: Definition and Explanation: By short run is meant a length of time which is not enough to change the level of fixed inputs or the number of firms in the industry but long enough to change the level of output by changing variable inputs. In short period‚ a distinction is made of two types of costs (i) fixed cost and (ii) variable cost. The fixed cost in the form of fixed factors i.e.‚ plant‚ machinery
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Economics Exam 1 Study Guide Vocabulary Opportunity Cost – the value of the opportunities lost Total Cost – the “all or nothing” cost of engaging in any activity Marginal Cost – describes how total costs change as I change the amount (or intensity) of the activity Benefits – The advantageous or desirable outcome of an action Inflation – an increase in the general level of prices Absolute Advantage – the ability to produce the same good using fewer inputs than any other producer. Production
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EGT1 Economics & Global Business Applications (V1 UG 0213)-PA Name: Christopher Talag Student Number: 274350 Task 1: A. Explain profit maximization from the following approaches: Profit maximization can be explained according to the following approaches according to McConnell (2012): 1. Total revenue to total cost - profit maximization is achieved when the difference of the total revenue minus the total cost is at the highest point. 2. Marginal revenue to marginal cost - means that profit
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Economic Concepts Worksheet Concept Application of Concept from Personal Experience Reference to Concept in Reading Economic Perspective Economic Perspective involves three elements 1. Scarcity and choice 2. Rational Behavior 3. Marginalism Economic Perspective is the understanding of why people choose one want over another When I graduated with my under-graduate degree I had to make the choice to either move back to my hometown where my family and friends were or take employment in
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Question 1 4 out of 4 points Economic theory is a valuable tool for business decision making because it Selected Answer: identifies for managers the essential information for making a decision. Question 2 4 out of 4 points Consider a firm that employs some resources that are owned by the firm. When accounting profit is zero‚ economic profit Selected Answer: must be negative and shareholder wealth is reduced. Question 3 4 out of 4 points Suppose Marv‚ the owner-manager
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BIOLOGICAL ASSETS AND AGRICULTURAL PRODUCE DEFINITION What is an agricultural activity? Using the Biological assets are living plant and animals in a farm. Transform them into agricultural produce for sale- harvested product like fruits‚ vegetable‚ milk‚ meat. The following conditions should be fulfilled. Capable of biological transformation Management of biological transformation Measurement of biological transformation RECOGNITION UNDER ASPE: CICA HB 3031 states biological assets and agricultural
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Materiel Acquisition Management MGT 5084 Case Study – Purchase Price: Just One Component Of Cost Total cost of ownership is related to procurement and use of a product. This cost is comprised of acquisition cost‚ ownership cost‚ and post ownership cost. The acquisition cost entails the price paid for the direct and indirect materials‚ products and services. Planning costs include the cost of developing requirements and specifications. Quality costs usually lower the design phase of future ownership
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BB 107 Tutorial 8 Part A: MCQ 1. When a purely competitive industry is facing a short-run profit which statement is true? A. Average total cost is less than marginal cost. B. Price and average total cost are equal. C. Marginal cost is at its maximum level. D. Marginal revenue is greater than price. 2. The long-run supply curve in a constant-cost industry would be: A. Vertical. B. Horizontal. C. Upsloping. D. Downsloping. 3. An economy is producing at the least-cost rate of production when: A.
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Week 2 (7) Trade and Comparative Advantage Chapter 3 Problem set Exercise 2.1 Assume there are just two countries in the world‚ i.e. the European Union (EU) and the Rest of the World (RW). Both countries produce and consume 2 products: bicycles (b) and apples (a). Per bike‚ the EU puts in 3 hours of labour while the RW puts in 5. Per ton of apples‚ the EU needs 2 hours v. the RW 1 hour of labour. A further given is that the EU has 2400 hours of labour available v. RW 1600. The world
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