Question

A. Wow, can you believe it? This company will match the best price offered by any of its competitors. They sure do have their customers’ best interests in mind,” says Cindy Consumer. Explain to Cindy why the economist thinks her viewpoint is naïve (since businesses always seek to maximize profits!) What are some other examples of behavior by firms that look like they are there to give consumers a great deal but are actually designed to increase firm profits?(10)

Answer 1

businessman always try to maximize their profits thatswhy economist thinks her viewpoint is naive.Behaviour of firms looks that they are their to give consumers best deal but exactly they are there for their own profit are as follows:

• The profit of company tend to increase by CSR(corporate social responsibility). By decrease the price they were trying to increase the demand of the product which does not affect the profit of dealer adversely.Marked price has given very huge margin which is not affected by any concession.
• Free gift is used to impress the consumer on purchase to increase the profit of the firm.These free gifts is used to increase the sale and it is also true that these free things increases the sale.Demand and supply will also increased
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