Short run output and price, Managerial Economics

Assignment Help:

SHORT RUN OUTPUT AND PRICE

In monopolistic competition, it's the product differentiation that permits its price without losing sales. 

Due to brand loyalty consumers will continue buying a particular product as preferred to all other brands in spite of increases in the price of that product.

If one firm lowers its price it may capture a few more customers therefore expanding its sales over and above the traditional customers.  Besides the product differentiation need not be physical, only the customers need to feel the products are different.

Generally the demand for one seller's product will be price elastic due to close substitutes.  If one firm raises its prices, TR will go down.  If the price is reduced there are possibilities of substantial increase in revenue because of capturing some customers from rivals.

The level of elasticity will depend on the strength of product differentiation.


Related Discussions:- Short run output and price

Externality in economics, Explain the concept of externality in economics? ...

Explain the concept of externality in economics? Give one example of a positive and a  negative externality in Australia.

Using total expenditure for calculating national income, Using Total Expend...

Using Total Expenditure for Calculating National Income The expenditure approach centres on the components of final demand which generate production.  It thus measures GDP

Managerial economic, gap between economic theory and business practice

gap between economic theory and business practice

International financial institutions, INTERNATIONAL FINANCIAL INSTITUTIONS ...

INTERNATIONAL FINANCIAL INSTITUTIONS In July 1944, a conference took place at Bretton Woods in New Hampshire to try to establish the pattern of post-war international monetary

Explain the importance of managerial economics, Explain the importance of M...

Explain the importance of Managerial economics Managerial economics bridges the gap among 'theoria' and 'pracis'. The tenets of managerial economics have been derived from quan

Relation between average cost and marginal cost, Q. Relation between averag...

Q. Relation between average cost and marginal cost? Relationship between MC and AC are the following: If MC is below AC then AC should be falling. This is because, if MC

Advantages of product differentiation, Advantages of Product Differentiatio...

Advantages of Product Differentiation We can distinguish between those advantages for the firm itself and those for the consumer: a.          For the firm. i.

Costs of unemploment and inflation, COSTS OF UNEMPLOMENT AND INFLATION   ...

COSTS OF UNEMPLOMENT AND INFLATION   In  an  economy  both  unemployment  and  inflation  have  adverse effects  and policy makers  formulate policy instruments to contain both

Evaluate the regression, Question: (a) The regression results for the ...

Question: (a) The regression results for the quantity demanded of good X is given by ln Q X = 1220 - 9.5 ln P X - 2.21 ln P Y + 1.01 ln M t values (5.3)  (-5.1

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd