MGTA01H3 Chapter Notes - Chapter 4: Break Even, Monopolistic Competition, Oligopoly
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MGTA01H3 Full Course Notes
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Chapter 4 pricing strategies and break even analysis. When businesses are determining price, they must try to sell to satisfy consumer needs and wants while also trying to make a profit. Two things determine the (cid:271)usi(cid:374)ess" a(cid:271)ility to set its price: When a business is offering a relatively inexpensive product that is similar in most respects to those offered (cid:271)y (cid:272)o(cid:373)petitors, it has li(cid:373)ited a(cid:271)ility to di(cid:272)tate the produ(cid:272)t"s pri(cid:272)e. i(cid:374)dividual businesses must therefore charge what everyone else charges. Market price: at any particular time, the price buyers and sellers agree to. In an oligopoly, if one supplier in an oligopoly raises or lowers its price, these changes are swiftly matched by the others. Oligopoly businesses tend to compete, therefore, on the basis of differentiation. Oligopoly businesses want consumers to associate their product with colours, desig(cid:374)s a(cid:374)d logos that (cid:271)e(cid:272)o(cid:373)e sy(cid:373)(cid:271)ols for the produ(cid:272)t"s relia(cid:271)ility requires that each business spend money on branding, advertising, and other forms of promotion.
