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between the shut-down point and the break-even point.
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Why firms choose non-price competition over price competition?
Imperfectly competitive firms engage in none-price competition (like advertisement). For example, in monopolistic competition, each firm has their own customers(by establishing some consumer loyalty), modest change in the output price of any single firm has no perceptible influence on the sales of any other firm, i.e one firm can raise price without losing all customers. Therefore, price competition makes no sense.
Is a purely competitive firm a price taker?
Indeed it is. A competitive market means that there are a lot of companies that sell the same product. With this conditions, if a company rise the price, consumers will easily find another company, losing all profits. Therefore a firm cannot control the price in a competitive market, it has to take the market price.
What is the proper amount of money to obligate at the award of a firm fixed-price contract?
The full amount of the contract
Explain why monopolistically competitive firms frequently prefer non price to price competition?
The monopolistically competitive firm frequently prefers nonprice competition to pricecompetition, because the latter can lead to the firm producing where P = ATC and thus makingno economic profit or, worse, producing in the short run where P < ATC and thus losing money,with the possibility of eventually going out of business.Nonprice competition, on the other hand, if successful, results in more monopoly power: Thefirm's product has become more differentiated from now less-similar competitors in the industry.This increase in monopoly power allows the firm to raise its price with less fear of losingcustomers. Of course, the firm must still follow the MR = MC rule, but its success in nonpricecompetition has shifted both the demand and MR curves upward to the right. This results insimultaneously a larger output, a higher price, and more economic profits.
Assume that the price of elasticity demand is -2 for a certain firm's product If the firm raises price the firm's manager can expect total revenue to?
decrease
Why firms choose non-price competition over price competition?
Imperfectly competitive firms engage in none-price competition (like advertisement). For example, in monopolistic competition, each firm has their own customers(by establishing some consumer loyalty), modest change in the output price of any single firm has no perceptible influence on the sales of any other firm, i.e one firm can raise price without losing all customers. Therefore, price competition makes no sense.
Is a purely competitive firm a price taker?
Indeed it is. A competitive market means that there are a lot of companies that sell the same product. With this conditions, if a company rise the price, consumers will easily find another company, losing all profits. Therefore a firm cannot control the price in a competitive market, it has to take the market price.
Why would a firm stay in business while losing money?
They might have a plan that will soon likely make them very successful financially.
What is the proper amount of money to obligate at the award of a firm fixed-price contract?
The full amount of the contract
What is a firm estimate?
A firm estimate is an estimate where the buyer is not willing to negotiate the price of an item. When a seller is firm on the price, there is very little you can do.
Explain why monopolistically competitive firms frequently prefer non price to price competition?
The monopolistically competitive firm frequently prefers nonprice competition to pricecompetition, because the latter can lead to the firm producing where P = ATC and thus makingno economic profit or, worse, producing in the short run where P < ATC and thus losing money,with the possibility of eventually going out of business.Nonprice competition, on the other hand, if successful, results in more monopoly power: Thefirm's product has become more differentiated from now less-similar competitors in the industry.This increase in monopoly power allows the firm to raise its price with less fear of losingcustomers. Of course, the firm must still follow the MR = MC rule, but its success in nonpricecompetition has shifted both the demand and MR curves upward to the right. This results insimultaneously a larger output, a higher price, and more economic profits.
Assume that the price of elasticity demand is -2 for a certain firm's product If the firm raises price the firm's manager can expect total revenue to?
decrease
Who receives money in a firm?
Someone who receives money in a firm is called a treasurer
What is price leadership by low cost firm?
Price leadership by low cost firm is what results when a firm determines the prices of services and goods within its sector.
Price determination in perfect competition?
Price under perfect competition is determined by the forces of demand and supply of the industry. The price once fixed up by the industry is taken up by all the firms and the firm can sell any number of units at hat price.=The firm may earn normal profits, super normal profits in the short run whereas it earns normal profits in the long run.=
What are the criticisms of exit price accounting profit?
Historical cost and current cost proponents have a common belief that entry prices must be used whether the firm can continue production. they argue that exit price accounting is too narrow in its interpretation of economic value.The critical event in exit price accounting does not relate to the performance of the firm but instead, concerns price changes of assets and liabilities. Because the emphasis is on price changes rather than operations, it can be difficult to evaluate the firm with reference to its operating efficiency because it concentrates on financial liquidity and short-term decision making.Historical cost and current cost proponents have a common belief that entry prices must be used whether the firm can continue production. they argue that exit price accounting is too narrow in its interpretation of economic value.The critical event in exit price accounting does not relate to the performance of the firm but instead, concerns price changes of assets and liabilities. Because the emphasis is on price changes rather than operations, it can be difficult to evaluate the firm with reference to its operating efficiency because it concentrates on financial liquidity and short-term decision making.
How does competition affect price?
If you are the only producer of a good or service, you can price wherever you want. If you price low, more people will want to buy, and you can increase the price and decrease your out put until you reach a maximum amount of profit. At this point, a monopolistic firm usually has more revenue than price; They could afford a lower price and greater output, but they wouldn't make as much money. (The quantity of maximum profit is at the point where marginal cost meets marginal revenue). If another firm enters the market, it can price just a little bit lower than the original firm, and it will get most of the business. This will cause a price war until each firm is pricing and producing at the point where average costs are at a minimum and neither firm ears profit; cost equals revenue. As more and more firms enter a market, the price becomes more and more stable. For a good like gold that is the same no matter where you buy it, the price is the same globally because if a firm priced higher, it would loose all its business. In short, competition causes the price for a good to be such that firms do not earn profit and the price lies at the value of a perfectly elastic demand curve.
