There maybe or no non-price competition like advertising, sales promotions and other market strategies, because the monopolist is the only source of the product. 4. Price and Output Determination under Monopoly Monopolist’s demand curve slopes downwards to the right. This means that he can increase his sales only by decreasing the price of his product and maximize his profit. The marginal revenue curve of a monopolist is below the average revenue curve and the MR curve falls faster than the AR curve, because he has to decrease the price of his product to sell an additional unit.
Price equals marginal cost and firms earn an economic profit of zero in perfect competition. In a monopoly, the price is set above marginal cost and the firm earns a supernormal profit. Economic efficient happen when firms produce an equilibrium in which the price and quantity of a good in perfect competition whereas monopolist produces an equilibrium at which the price of a good is higher and the lower quantity. Therefore, governments always seek to regulate monopolies by legislation. 2.0 Characteristic of Perfect Competition and Monopoly Sloman and Hinde (2007) point out perfect competition is a market in the condition broad range of firms selling the identical product without any restriction on entry and exit and price taker at the same time.
Currently, the main competitor for the Coca – Cola Company is the PepsiCo, Inc., which also has a wide range of beverages under its brand. Both of the companies are the leaders of the carbonated soft drinks industry and they compete in order to surpass. Both companies committed heavily to sponsoring outdoor events and activities in order to advertise their products or brands. Also, there are other soda brands in the market which became popular as they have unique flavors. For example, Dr. Pepper could succeed to emerge in the market with its unique taste.
If the tabarru’ amount is less than the sum of claims then the Risk Fund will be deficit, otherwise the tabarru’ amount exceed the claim then the Risk Fund will have a surplus. The wakala model is the default standard for takaful. Operators charge and carry out takaful operations. For takaful operators, he makes a profit if wakala fee exceed expenses. The surplus is actually the excess premium paid by the participants, so the surplus refund can be explained as a experience refund.
In the concept of consumer’s surplus, Marshall states, ‘excess of the price which a consumer would be willing to pay rather than go without a thing over that which he actually does pay is the economic measure of this surplus satisfaction…. it may be called consumer’s surplus.’ For example, there is a commodity that you suppose to buy, and it is useful, this product doesn 't have alternatives. The price of this product is 1000 HUF. However, as you prepare the 1000 HUF go to a market, it shows that the price of the good is 500 HUF. So, the different price between what you trying to pay and the actual price (1000HUF-500HUF=500 in example) is called consumer’s surplus.
The companies involved in the price war can take steps to curtail their Selling, General and Administrative (S, G & A) expenses to improve their performance. If the company’s pricing strategy succeeds, the company will earn good operating profits. However, if it fails, the curtailed and well planned S, G & A expenses will help the company mitigate the competition risks. The lower S, G & A expenses as a percentage of revenue indicates a better performance. Sainsbury’s already had much lower S, G & A expenses as a percentage of its revenue than that of Morrisons.
Having this option only benefits this company short term because they are able to decrease the cost of inventory they are carrying at that moment. However, if there is not a high demand for their products, there is still that possibility that their distributors will return their inventory to them within the nine month time frame. If all the distributors return the inventory because they weren’t able to sell the product, DEW’s cost of inventory will skyrocket bringing the company back to the bottom. A quick temporary fix should never be the appropriate solution for a business that has long-term
There are many other soft drinks like coca cola, Pepsi, etc. which is giving customer their product in low price to gain the mass market. All of these strategies have small effect on Red Bull. However, it is gaining more revenue compared to its competitor. It has competitive advantage from its competitor because of its international marketing strategy (publicity/endorsements).
Coca Cola targets both genders with its wide variety of drinks. This market is relatively large and is open to both genders, thereby allowing greater product diversification Family size basis is also a base segmentation for Coca-Cola. In our society, we have families with different family size. So Coca-Cola makes a variation in their served bottle size into many ways such as 500ml, 1L, 1.5L, 2L pack. People can easily choose a suitable pack based on their family size Coca-Cola segments different income levels by packaging.
The seller sell homogeneous at single uniform price. The price is determine not by the firm but by the industry i.e. firm is a price taker. An individual firm cannot influence the prevailing market price of d CHARACTERISTICS OF THE PERFECT COMPETITION 1. LARGE NUMBR OF BUYERS AND SELLERS There are large number of buyers and sellers and each seller produces an insignificant (very small) proportion of total output of the industry.