Question

STUDY QUESTIONS 1. Of what use is a market model? How do we relate it to reality? 2. Why does perfect competition simplify both marketing and procurement for a manager? 3. What is meant by the entry and exit of firms? Why are entry and exit easy or difficult in the various market models? 4. How do demand curves vary in the different market models? How does each affect managerial behavior and planning? 5. What is a supply-and-demand model? 6. Suppose that through some cultural revolution one-half of Americans became vegetarians and would no longer eat any kind of meat. Assume that beef producers compete in perfect competition, and use supply and demand curves to explain the impact. What would happen in the short run to beef prices and the profits of beef producers? In the long run? 7. Which of the following are standardized commodities, and which are dif- ferentiated products? hard red winter wheat oranges Wheaties Arrow shirts corn Folgers coffee packaged cake mixes cigarettes potatoes 8. What kind of market power is possessed by a firm that has a highly differ- entiated product?

Answer 1

. . Market model is used to illustrate how faces of demand l supply interact to deteenine prices & quantity sold. This is quite useful because other models are just varia - - tow of it eg faulgu exchange market, laba They all quite realiste eq. in detuntuing buice of a good that one wentes into market to Ruchas, the ditumination of one's wage rate for work etc. are all atter the realistic applicatiols of market model- market etc. Qoz. In perfect competition, firme as a pilu taker ie do not require to spend on adveitising. It can sell infinite amant of good on the prevalling market peer l therefore, the question of marketing is useless! In perfect competition, there is peefect mobility of factors of Pueduction among industices and then exists pufect krowledge in the market. So, no firm can benefit by proudning raw material in advance as the salue peu exists for all the fines in the market Qes Entry & exit of fans refus to coming ind out of the industry due to some reasons like profits , costs, patents, copyrights, government policies etc. Entry & exit is easy in perfut competition because firme encule lower costs ou establishing themselves. Moreover, there is low degree of lively among fire while in markets like monopoly, then e hue baudes to entey ie Cut that competition etc Scanned with CamScanner

Therefou it depends upon the relative competition in market, existing profits, patents/ copyrights of any that a firm may enter easily a not. The same factas pated in addition to operating costs determine fins exit. om In perfet h. Competition e In Mouspely R pufictly elastic - AR/ Demand quite inelastic due to monopoly power -Demand Нау In Monopolistic competition pica - quite elastic due to presence of close substitutes & and lower market power Deward to than que monopoly. Qy - Mauaquial behavior (0) In pufect competition, he doesn't bother about marketing and prouvement because from is a peice takes only with no market power (9) In monopoly, he tues to maximize profits by indulgine in brice discuimination I will try to impost effective banies for the potential entrauts as to retain market power He would try to create an excess Capacity to be used at the time of price competition- in future ol In monopolistie Competition, manager would try to different . -pade its product from other ital firms to that it eers some market power or qudependence in orang puer His focus would be more on now Cocanned wit buite Ocorupetitou ogi adventslug, product innovat - Process innovation etc.? CamScanner