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TMGT 3337 Chapter Notes -Starbucks, Marginal Cost, Perfect Competition

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jbanda1
25 Apr 2022
School
South Texas College
Department
Technology Management
Course
TMGT 3337
Professor

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Document Summary

For each of the following pairs of goods or services, identify the one for which the price elasticity of demand is greater and explain why. **note: for the following answers, when i write greater price elasticity of demand it refers to a greater negative value. Please let me know if this is incorrect way to address price elasticity of demand. Coffee / starbucks coffee - coffee has a greater price elasticity of demand because an increase in the price of non-brand coffee will lead to greater decrease in quantity demanded due to competition. Starbucks has a smaller price elasticity because of the distinction it has created on their branded products as well as their facilities. Prescription medicine / over-the-counter medicine - over-the-counter medicine has a greater price elasticity of demand than prescription medicine because of the diversity of brands and products offered over the counter, this means greater competition.

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Related Questions

A firm that has the ability to control to some degree the price of the product it sells:
 
a) is also able to dictate the quantity purchased.
 
b) faces a demand curve that is inelastic throughout the range of market demand.
 
c) is a price maker.
 
d) faces a perfectly inelastic demand curve.

44) The price of coffee beans rises on the international market by 7%. Because of its higher raw material costs, The Highland Creek Coffee Shop raises the price of its regular sized coffee by 5%. At the same time, Starbucks raises the price of its coffee at all of its Canadian locations by 9%. This kind of pricing decisions would suggest these businesses are engaged in: a) b) perfect competition a monopoly an oligopoly monopolistic competition

In only three decades, Starbucks has grown at an astonishing pace, from a small Seattle coffee shop to a powerhouse with more than 21,800 retail stores in 65 countries. Starbucks’s success, however, has drawn a full litter of copycats. In the early 1990s, there were only 200 coffeehouses in the United States. Today, there are more than 21,400. Some 85 percent of Starbucks’s sales come from its own stores.
With the implementation of the TRAIN law, there is an increase in the number of buyers. Wishing to penetrate the Tacloban City market, they have the following data: (1) Bo’s Coffee will have the least technological advancement by 2020, (2) McDonald’s will have the highest input price of raw materials by 2020, and (3) Dunkin Donuts will lay off the highest number of employees by 2020.
 

 Competitor           |      Market Share        |           Probability

 McDonald’s                       40 %                                  53 %
                                            30 %                                  47 %

Bo’s Coffee                        40 %                                  50 %
                                            30 %                                  50 %

Dunkin Donuts                  40 %                                   52 %
                                            30 %                                  48 %
 

Should Starbucks build a store in Tacloban City? Why or why not?