Risk and uncertainty, coke and Pepsi competing for prices. if both higher the prices, both will...
Risk and uncertainty, coke and Pepsi competing for prices. if both higher the prices, both will suffer, if if both sell at low price, profits are suffering, if one decides to sell at higher price, it will lose customers. what will be risk and what will be uncertainty
Homework Answers
Risk - Owners take risks when running a business. This means they take actions where the outcomes are unknown. The ascertainment of risk can be measured.
Uncertainty - The markets in which businesses operate are often subject to external in consequences. This means that events which are completely beyond the control of businesses can have an impact in the market, which can have financial consequences. The ascertainment of uncertainty cannot be measured.
Case 1 - if both higher the prices, both will suffer - Here the Coke/Pepsi are taking the risks to increase their profits where the outcome is known that the sale of the products will decrease. So, this would be a risk.
Case 2 - if both sell at low price, profits are suffering - Here the Coke/Pepsi are taking the risks to increase their sales where the outcome is known that the profits will decrease. So, this would be a risk.
Case 3 - if one decides to sell at higher price, it will lose customers. - If Coke decides to sell at higher price to increase profits, it will lose customers and it would be risk for Coke. But it would be uncertainty for Pepsi as it is beyond its control. Similarly, If Pepsi decides to sell at higher price to increase profits, it will lose customers and it would be risk for Pepsi. But it would be uncertainty for Coke as it is beyond its control.
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Risk and uncertainty, coke and Pepsi competing for prices. if
both higher the prices, both will...
Consider a market with two firms, Coke and Pepsi, that produce soft drinks. Both firms must...
Consider a market with two firms, Coke and Pepsi, that produce soft drinks. Both firms must choose whether to charge a high price ($1.25) or a low price ($0.85) for their soft drinks. These price strategies with corresponding profits are depicted in the payoff matrix to the right. Coke's profits are in red and Pepsi's are in blue. V, and Pepsi's dominant Coke's dominant strategy is to pick a price of strategy is to pick a price of $ Coke...
Please for provide step by step solutions 1.Suppose that Pepsi and Coke are competing in a...
Please for provide step by step solutions
1.Suppose that Pepsi and Coke are competing in a horizontally
differentiated Bertrand market and setting prices.
Coke face marginal cost MCc = 6 and pespsi faces marginal cost
MCp = 4
(a) Write the equation for the demand for coke in terms of price
Pc as a function of Pp and Qc.
(b) Determine the marginal revenue for Coke as a function of Pp
and Qc.
(c) Find the equation tha ttells how...
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. The leaders of Pepsi-Cola have decided to raise prices on Pepsi Cola's carbonated soft drinks. It is a fact that the firm has kept prices low (growing slower than inflation) for decades, but now that consumption of carbonated soft drinks is decreasing, the low prices are reducing profits. Pepsi plans to raise prices at least 10% above current levels for retail customers, and maybe as much as 15%. . Will raising the price lead to better or worse profits...
Suppose the demand for Pepsi is qp = 54 - 2pp + 1p. The demand for Coke is qc = 54 - 2pc + 1pp. Each firm faces a constant marginal cost of zero. Determine the Bertrand equilibrium prices. What happen...
Suppose the demand for Pepsi is qp = 54 - 2pp + 1p. The demand for Coke is qc = 54 - 2pc + 1pp. Each firm faces a constant marginal cost of zero. Determine the Bertrand equilibrium prices. What happens to the Bertrand equilibrium prices and profits if increased differentiation causes the demand for Pepsi to become qp = 104 - 2pp + 1pc while the demand for Coke remains unchanged?
True or False: (1) Risk can be quantified, estimated, and hedged. Uncertainty cannot. Don’t mistake risk...
True or False: (1) Risk can be quantified, estimated, and hedged. Uncertainty cannot. Don’t mistake risk for uncertainty, and try to design institutions flexible enough to deal with unforeseen contingencies. (I believe the answer is TRUE). (2) When customers have unknown values, you face a familiar trade-off: price high and sell only to all customers, or price low and sell to all customers. (I am not sure about this one for the wording. I think the answer is TRUE as...
You will see that I'm asking you to think of yourself as president of the Pepsi...
You will see that I'm asking you to think of yourself as president of the Pepsi Corporation. The key in the following situations is to determine what to do with the price of Pepsi based on your understand of price elasticity of demand. So, read each of these scenarios one by one and based on the information given decide if you want to raise, lower or leave the price of Pepsi the same. You don't have to be specific as to...
5. Consider two firms selling differentiated varieties of a product, e.g., Coke and Pepsi. Each firm...
5. Consider two firms selling differentiated varieties of a product, e.g., Coke and Pepsi. Each firm j chooses a price pj for its own variety. Since these varieties are close substitutes, the demand that each firm faces depends not only on its own price, but also the price of its competitor. Specifically, the demand for j’s variety is given by Dj (pj , p−j ) = max 0, 60 + p−j − 2pj Suppose that both firms can produce any...
There are two downstream key buyers of Pepsi’s (or Coke’s) soft-drink concentrate (syrup): fast-food restaurants and...
There are two downstream key buyers of Pepsi’s (or Coke’s) soft-drink concentrate (syrup): fast-food restaurants and franchised distributors (often called franchised bottlers – they sell within a fixed geography – think of their addressable market as defined geographically by either Coke or Pepsi). Restaurants can serve Coke or Pepsi products or even both – but generally, restaurant chains choose either Coke or Pepsi and they have relatively short term contracts. Franchise bottlers have a long-term contract with either Coke or...
There are two firms in an industry. If both collude and set the monopolistic price, their...
There are two firms in an industry. If both collude and set the monopolistic price, their profits will be $20 million each. If one firm sets the higher monopoly price and the other tries to get more business by charging a lower price, the high-priced firm earns $6 million in profits and the low-priced firm earns $30 million in profits. If both charge low prices, both earn $10 million. What is the most likely outcome for the two firms? a....
Consider the case of two firms competing in a market. Each firm has a constant marginal...
Consider the case of two firms competing in a market. Each firm has a constant marginal cost equal to $10. The demand function is D(p) = 100 − p (p is the price in cents) Firms are competing by choosing prices simultaneously. When prices are equal, each firm gets exactly one half of the total demand. P must be an integer value. 1. Find all the Nash equilibria of this duopoly game. 2. Calculate each firms profit under any equilibria. 3....
Consider a market with two firms, Coke and Pepsi, that produce soft drinks. Both firms must choose whether to charge a high price ($1.25) or a low price ($0.85) for their soft drinks. These price strategies with corresponding profits are depicted in the payoff matrix to the right. Coke's profits are in red and Pepsi's are in blue. V, and Pepsi's dominant Coke's dominant strategy is to pick a price of strategy is to pick a price of $ Coke...
Please for provide step by step solutions
1.Suppose that Pepsi and Coke are competing in a horizontally
differentiated Bertrand market and setting prices.
Coke face marginal cost MCc = 6 and pespsi faces marginal cost
MCp = 4
(a) Write the equation for the demand for coke in terms of price
Pc as a function of Pp and Qc.
(b) Determine the marginal revenue for Coke as a function of Pp
and Qc.
(c) Find the equation tha ttells how...
. The leaders of Pepsi-Cola have decided to raise prices on Pepsi Cola's carbonated soft drinks. It is a fact that the firm has kept prices low (growing slower than inflation) for decades, but now that consumption of carbonated soft drinks is decreasing, the low prices are reducing profits. Pepsi plans to raise prices at least 10% above current levels for retail customers, and maybe as much as 15%. . Will raising the price lead to better or worse profits...
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