Economics

Question 1

Porter’s Five Forces
(MACRO)

Answer 1

Barriers to Entry
Market Competitiveness
Existence of Substitute Products
Bargaining Power of Customers
Bargaining Power of Suppliers

Question 2

Competive Strategies

Answer 2

Determined by the value the firm offers to its customers minus the cost of creating that value.

1. Cost Leadership: Lowest cost
   Sell for less
   Qty focus
   Price takers
2. Differentiation Advantage:
   Product Value
   Increase price
3. Best cost provider (Middle of the road)
   Good price & some value
4. Niche
   Focus in a small group market.

Question 3

Elasticity

Answer 3

E>1 = Elastic. %C QD or SD/%CP
Price sensitive (inverse relationship)

E<1 = inelastic. CQD/CP
Not price sensitive
Directvrelationship

Question 4

Market Structures

Answer 4

1. Perfect Competition
   No difference
   Many firms
   No barriers
   Price takers
2. Monopolistic Competition
   Product differentiation
   Many firms
   Few barriers
   Ability to control price
3. Oligopoly
   Less comp
   Similar products
   Small # Firms
   High Barriers
   Control price & qty
4. Monopoly
   No comp.
   Complete control

Question 5

SWOT Analysis

Answer 5

Strengths
Weaknesses
Oportunities
Threats

Question 6

PEST Analysis
(MACRO)

Answer 6

Political
Economic
Social
Technological

Question 7

Absolute Advantage

Answer 7

Ability to provide a good or service more efficiently than another party.

Question 8

Comparative Advantage

Answer 8

Provide a good or service at a lower opportunity cost.