Economics Paper Essay Example | Topics and Well Written Essays - 1000 words

Economics Paper - Essay faceOn the other hand if the local currency is strong, the foreign rate of ex multifariousness go forth be high thus making troupes produces to be expensive. At this situation, the company may opt for a house servant market for its products.In domestic market, the company has some power to decide on the monetary value of its products. all the same this will depend on market structure of its product i.e. Whether it is a perfect competitor, monopoly, or duopoly.In perfect competition market, the pricing strategy will be based on the forces of demand and picture of its product, which will be determined by the level of competition from other players in the market. Perfect competition market has a perfect elastic demand curve. Here the market determines the equilibrium price level. At this equilibrium price, the company will sell as much as it can. A slight adjoin in price will mean the company will sell nothing.In monopoly market structure, the company has the sole power to decide on the price it will sell its product. That is why monopolist is cognize as notorious in charging higher price of their products. Monopoly can interfere with the demand of its product by lowering its output here the prices will go up and make more profit.In racing shell of the company being a duopoly, it may collude with the other company that produces the same type of product and charge high prices provided that, there is trust between them. Therefore pricing strategy here will be dependent on trust and cooperation among the two market participants. Question two Most companies atomic number 18 profit maximise and therefore their core objective is to maximize profit. However others aim at maximise their sales. Profit oriented searcher will aim to produce the quantity and charge the price devoted by the point where marginal revenue equals marginal cost. This is as illustrated in the diagram below determine searcher aiming at maximizing sales will produc e as a point full cost curve (TC) cuts total revenue curve m (TR) i.e. at the highest point possible. This is as illustrated below. legal injury searcher aim at maximizing sales, if his intentions are to promote the welfare of the producers i.e. to create the market to the producers products.In a nutshell, price searcher must therefore choose between maximizing profit and maximizing sales.Question threeElasticity refers to the responsiveness of quantity demanded or supplied due to change in prices or income i.e. Change in quantity demanded or supplied due to a unit change in price or income. In this scenario I would expect demand for a specific brand of running seat to be less elastic than the demand for running shoes in general. This is because specific brand limits the enjoy and preferences of a customer. This in turn limits the ability of the customer choice from a wider variety. Therefore a change in price of that specific brand is likely to be highly elastic. Consumers do no t hand substitute. Demand for a general brand of shoes will be more elastic since customers form