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.
Q. Avoiding Surplus and Inadequate Production? Demand forecasting is essential for the new and old organisations. It is somewhat necessary if an organisation is engaged in larg
DIFFERENTIALS AND DISEQUILIBRIUM In a free enterprise system, workers aim at maximizing their wages. Hence, it would be expected that workers would move form low-paying indus
bargaining power of customer for a cement company
In this question you will consider the impact on the building industry of the earthquake. Two construction and materials indices have been provided for the analysis. If your famil
what is demand estimation
Question 1: Either ‘Today the business organizations are quite different from the traditional classical firm with a wide range of objectives.' Discuss the above statement
price output determination under monopoly explain
encrimetal concepts
THE DETERMINATION OF EQUILIBRIUM NATIONAL INCOME National income is said to be in equilibrium when there is no tendency for it either to increase or for it to decrease. The a
Joe is evaluating the marketing strategy at his restaurant and inn. Suppose that in response to a $2.00 off sales promotion for spaghetti dinners, Joe finds that nightly dinner sal
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