midterm Flashcards
every industry or market has (3)
time
product
geographic dimensions
if your firms success or profitability is closely linked to profitability of your primary industry
demand and supply analysis
movement along the demand curve indicates “quantity demanded” increased
shift in demand
only one factor that affects demand
price
affect demand but can control by company
controllable factor
can manipulate controllable factor
firm
something thet affect demand that a company cannot control
uncontrollable factor
at a given price, more quantity demanded
demand increase
describe the behavior of a group of seller
supply curve
price at which quantity supplied equally quantity demanded
market equilibrium
increase in income
increase in demand
increase in price of a substitute
decrease in price of a complement
describe seller in a competitive market
market supply
describe buyer behavior
market demand
increase/decrease in demand
increase/decrease in supply
way that various industries are classified and differentiated
market structure
4 types of market structure
perfect competition
oligopolistic market
monopolistic market
monopolistic competition
price have fully adjusted to production cost
long-run equilibrium
ability of assets to move from lower to higher valued uses
indifference principle
difference in wages
compensating wage differentials
firm can earn positive profit
monopoly
economic perspective locates the source of advantage at the industry level
industrial organization
locates it at the individual firm level
resource based view
the best industries are characterized by (5)
low buyer power
low supplier power
low threat from substitute
low threat of entity
low level of rivalry between existing firm
group of firm producing products
industry
cmeo
chief managerial economics officer
3 basic strategies
cost reduction
product differentiation
reduction in competitive intensity
assumes that industry structure is the most important
industrial organization
framework for analyzing the attractiveness of an industry
five forces model
art of matching resources
strategy
help domestic supplier and foreign customer
currency devaluation
economies of the developed world experienced steady growth
great moderation
similar to long run relationship
purchasing power parity
exporters could make money by buying the good in one country
arbitrage
prices determined by supply and demand
exchange rate
set a range of standard price
price shemes
sale of one product
cannibalizing
reduce cannibalizing
repositioning
lrmr
long run marginal revenue
lrmc
long run marginal cost
when demand is difficult to predict
revenue management
minimize the expected cost
optimal price
marketing tactics involved paying for space to promote a product
advertising
scale strategy in which brand temporarily reduce the price
promotional pricing
strategy that uses pricing to influence a customers spending
psychological pricing
third degree price discrimination
direct price discrimination
price discrimination is more profitable
low marginal cost/with less elasticity demand
allow people in countries with higher drug
reimportation/ parallel trade
we can identify members
direct price discrimination
we cannot perfectly identify the two groups
indirect price discrimination
tension in the law about the effects of price discrimination
robinson patman act
