BUSM 2010 Final Exam Questions With
Solutions
competitive reference point above, at, below
pricing constraints demand, availability of close substitutes, single product vs product
line, cost of producing/marketing
Single Product vs Product line EX: Apple came out with 3 new iphones, hoping t...
pricing constraints demand, availability of close substitutes, single product vs product
line, cost of producing/marketing
Single Product vs Product line EX: Apple came out with 3 new iphones, hoping to reach
different economic target markets
Cost of producing and marketing have to cover fixed and variable costs first and also try
to make a profit
Pure Competition Characteristics extent of price competition = almost none
extent of product differentiation = none
extent of advertising = little
ex: identical commodity products
Oligopoly Characteristics extent of price competition = some
, BUSM 2010 Final Exam Questions With
Solutions
extent of product differentiation = various, depends on industry
extent of advertising = some
Few sellers who are sensitive to each others prices
pure monopoly price competition = none
differentiation = none
advertising = little
ex: xcel energy, BUT now they have to get approval before raising prices
"For Prescription Drug Makers, Price Increases Drive Revenues" pure monopoly
one seller who sets price for unique product
drug makers have high pricing power, especially on creation of new drugs because of patents
monopolistic competition price competition = some
differentiation = some
, BUSM 2010 Final Exam Questions With
Solutions
advertising = much
may sellers who compete on non price factors
Factors of Demand Curve -consumer tastes
-price of complementary/substitute products
-consumer income
Total Revenue (TR) the total money received from the sale of a product
price x quantity sold
Marginal revenue (MR) the change in total revenue that results from producing and
marketing one additional unit of a product
price elasticity of demand a measure of the sensitivity of demand to changes in price
Price Elasticity of demand = % change in quantity demanded / % change in price
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