But look more at how they are constructed (how markets themselves are constructed) 1 4/10/2012 Construction of markets • Free markets operate within institutional boundaries • E.g. child labour – developed countries have legislated against it • Another e.g. – slavery: we now take it for granted that you cannot trade in humans • What is considered ‘state intervention’ in one place is not in another. • What is market failure then? • When a market does not work in the way expected of an ideal market • In some s
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mechanisms * Traditional economy- you do what your parents do * ex: India in a way because of the caste system * Market economy- based on supply and demand, prices * Command economy- based on the government * Markets need homogenous goods, no barriers to entry or exit, perfect information and many buyers and sellers problem is that this is not the case, markets are not perfect List and describe the classification of economic systems based on forms of ownership * Capitalism-
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EGT: Task 2 Elasticity of demand references the level of reaction that a consumer will display to a price change of a particular product. In general, this term describes a % change in the quantity demanded in response to % change in pricing. The general equation used to calculate elasticity of demand is defined as: (Gillespie, 2010). This number is then compared as a critical threshold. In the case of elasticity of demand, the critical threshold number is 1. If the result is greater than 1
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Wal-Mart Stores Inc.: Dominating Global Retailing The retail industry in the U.S. has become saturated, and the market is control by a few big retailers. They all offer very similar products, so the differentiating factor are usually quality and price. Competitive advantage comes from innovative strategic thinking, funds to buy other competitors, and impeccable execution. In addition, the global economic crisis has increase customers’ price sensitivity, and has put more pressure on retailers.
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Chapter 11 Price-Searcher Markets with High Entry Barriers Questions 1 through 10 are a suggested chapter quiz. 1. When economists talk about a barrier to entry, they are referring to a. a factor that makes it difficult for potential competitors to enter a market. b. the opportunity cost of equity capital that is incurred by a firm producing at minimum total cost. c. the downward-sloping portion of the long-run average total cost curve. d. the declining
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Microeconomics Chapter 1 What is economics? Economic questions exist because everyone wants more than it can possibly get. We can't satisfy all our wants, this is called scarcity. General shortage of everything is scarcity. Because of scarcity we must make choices. These choices depend on the incentives we are faced with. Incentives are rewards that we would reap or a penalty we would face if we made a certain choice. Definition of economics- the social science that studies the choices that
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for example some companies base their decisions on rational calculations, others simply on imitation, and on the market variety mechanisms that let some firms to develop and stay alive and others to be unsuccessful. This view causes the image of the daring entrepreneur, central to the classical perspective, to fall apart: it is not one manager but the mix between the forces of market selection, disordered events, and processes of positive reaction that determine performance. The evolutionary approach
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the model is of little practical value’. (2.5 marks) (b) Illustrate with a diagram and explain the short-run perfectively competitive equilibrium for both (i) the individual firm and (ii) the industry; (2.5 marks for diagram and 2.5 marks for explanation) (c) Illustrate with a diagram and explain the long-run perfectly competitive equilibrium for the firm (2.5 marks). Question 4: (a) Explain and illustrate using a diagram why a monopolist
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reached the maturity stage of the product life cycle. This means our company faces more competition than ever. In response to the saturated market, we must decide whether re-branding and redesigning our packaging is a way we would like to attract new consumers to our product, increase consumption and, therefore, increase our market share of the breath mint market. It is important our company understands the risks and benefits of changing our packaging, that has remained the same for over forty years
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leading global technology company. He had pushed the company into new markets and went from making microchips to creating information and communication appliances and internet services. Intel’s extensions into so many markets caused them to withdraw from a number of them. Mahajan, Sharma and Buzzell (1993) stated that it is important for the individuals creating the competitive strategy to assess the competitive entry into the market. Barret’s changes did not stop here. During his first three years
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