Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Menu Costs
Why do firms not change their prices very frequently? Obviously, the costs of changing prices at frequent intervals and in small amounts must be more than the benefits obtained from such a change. Firms prefer to wait before they make price changes in relatively large amounts and in the mean time absorb the losses that they would suffer by not changing prices. This of course presumes that the firms have some monopolistic price setting power and the losses referred to above include lower profits than would have been possible if prices had been raised, and not necessarily actual out-of-pocket losses.
It is easy to understand this behaviour of monopolistically competitive firms through the example of restaurants competing with each other. The term 'menu costs' immediately becomes meaningful as the costs that would be incurred in changing the menu cards every time there is a change in the prices of items on the menu. These printing costs are surely negligible, but the more important costs are in terms of the loss of customers that a firm would face if it subjects its clientele to the 'irritability' of continuous, small changes in prices. The concept of menu costs in a modem economy is indeed broad. It is also widely applicable, given the proliferation of automatic dispensers (e.g., coffee machines) and pay telephones that operate on coins.
It is easy to imagine the cost that would be incurred by the suppliers if these ubiquitous machines were to be adjusted every time a price change is effected. The firms would rather not change their prices. It is this idea of weighing the costs of changing prices against the benefits obtained from changing prices that is formalised in the Mankiw model that we consider below.
Enumerate the Scope of managerial economics The scope of managerial economics contains following subjects: 1. The Theory of demand 2. The Theory of production 3. The
“Managerial economics involves use of economic analysis to make business decisions involving the best use of a firm’s scarce resources” Explain the statement with suitable example.
Danger of over-specialising A country may feel that in its long-term interests it should not be too specialized. A country may not wish to abandon production of certain
neoclassical thinking assumes that all firms are established to make profit has been challenged by managerial discretion model.How successful have been these models to maximize pro
real GDP is increasingly criticized for its alleged failure to adequately measure the standard of living. To what extent do you think this criticism is valid?
what is the importance of demand forecasting to managers
Advantages of Perfect Market It achieves, subject to certain conditions, an allocation of resources which is: socially optimal" or "economically efficient" or "pareto effi
points and its explanation
WHAT ARE THE PRINCIPLES OF MANGERIAL ECONOMICS
in the context of oligopoly theory explain the channels via which either a cost reduction or a quantity increase influence a supplier''s profitability
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd