Question

es in demand will increase shart-run profits but not necessarily long run 7. Price is not the only variable of competition Managers with differentia ed products and budgets for promotion seek to control in a limited way the position of demand curves for their products and services. Some firms spend large amounts on developing and merchandising new products. Others may respond to a price cut of a competitor by increas ing their TV ads. In numerous ways the marketing of differentiated foods by processors is quite different from the marketing of commodi ties by farmers 8. Although our discussion focused on sellers, it is important to realize that buyers also operate in various environments that are similar to those of sellers Buyers are constrained by the market in which they operate and by shifts in demand and costs. Why is it more difficult to predict the impact on price of a dead ligopoly than in perfect competition! 10. Sam Browne operates a little restaurant on Main Street. Hences Browneburgers at the same price as the popular four-ounce hamburg ers of the fast-food restaurant out on the highway, is Sama price ora price take? Do you see any advantages to Sam in adopting such a pricing strategy? 11. Why do most firms strive to become oligopolists? How might this affect a market over time is the impact different in different markets! CLASS EXERCISE STUDY QUESTIONS In your commodity group, use the agricultural commodity assigned in Chapter 1 and choose one agribusiness from your answer to Question of the Chapter 1 exercise. Investigate the agribusiness, and identify the following aspects: 1. Site 2. Sales 3. Scope of product line 4. Worth (if public 5. Number of employees 6. Locations globally 7. Market structure may be multiple because firms are multi-product, so choose one product) 8. Industry sector Prepare to present your findings to the class. 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 Folgers coffee packaged cake mixes cigarettes potatoes What kind of market power is possessed by a firm that has a highly differ- entiated product? com

Answer 1

1.A market model is used to demonstrate how the forces of demand and supply is act together to determine the quantity ond the prie of the goods soild .in the real life problem if the demand is high and the supply is low the price will tend to be high and if the demand is high and supply is low the price is tend to be low.

3.When a new firm enters the market for the pupose of sale of goods or services or running a business is called entry in ecconomics . While, when an existing firm leave the market due to any negative factor such as persistant loses is called exit from market

Entry and exit are different in different market models .In a perfectly competitive market firms are free to enter and exit from the market wheras in monopoly their are certain barriers for the entry andd exit of firms .therefore the entry and exit are free or easy in some market models and difficult in others

7.Standardised commodities are commodities with similar specifications which are uniform and non unique. Differentiated products are non uniform products .

Standardised goods in the question are corn , potatoes ,oranges,hard red winter wheat. Wheaties ,Arrow shirt, packaged cake mixes,folgers coffe ,cigerettes are differentiated products.

6.In the given scenario the demand of beef decline rapidly which lead to non equilibrium situation where the supply is greater than demand . in this situation in ordeer to be at the equilibrium the price of beef should be reduced accordingly inorder keepup the demand with the supply thus leads to a fall in price .In the long run the reduced price will become the equilibrium priice and the profit tend to be lowered

9. Oligopoly is a market situation in which small number of large firms have all or most of the control over the industry.The oligopolistic firms have a reasonable control over the price of the good as if they compete hard they may shows the charecteristics of perfect competition and can push down the price even low than what the demand is .The oligopolists can work with each other to push the price up even if the demand is low also.Therefore unlike from perfect competition the price is not fully determined by the market forces of demand and supply but the oligopolists can also act as a driving force for the change in the price .

10. Since Sam decided to sell his product at the price already prevailed inthe market  he is a price taker as price taker is a person who accepts the prevailing market price .Since most of the players in a perfect compettitive market are price takers sam can have the advantage of getting more customers if his products are better in quality.