Economics Assignment | Economics of Globalization
Added on 2020-05-16
16 Pages2782 Words67 Views
Running Head: ECONOMICS OF GLOBALIZATIONEconomics of GlobalizationName of the StudentName of the UniversityAuthor note
ECONOMICS OF GLOBALIZATION1Table of ContentsAnswer 1..........................................................................................................................................2Answer 2..........................................................................................................................................3Answer 3..........................................................................................................................................4Answer 4..........................................................................................................................................7Answer 5..........................................................................................................................................8Answer 6........................................................................................................................................11Answer 7........................................................................................................................................13Reference list.................................................................................................................................14
ECONOMICS OF GLOBALIZATION2Answer 1 In the past few years, use of microwave has increased rapidly. In the fast growing world,people have less time to spend on kitchen. With increasing earnings, people are now optimallyallocate their time. In microwave, foods are prepared with a much less time. A variety of foodcan be prepared in microwave. With increasing use of microwave,it has become a vital kitchenappliance (Pitchai et al.,2016). The increased use of microwave raises the demand formicrowaveable food as well. People has also become increasingly health conscious and islooking for healthy food option. With presence of so many firms in the industry, the marketstructure takes forms of perfectly competitive market as assumed in the previous assignment.However, with changing market scenario the low-calorie frozen microwaveable food industryhas characteristic similar to monopolistic competition. It is a form of imperfectly competitivemarket that has characteristic of both competitive and monopoly market (Chugh &Shapiro,2017).The competitive characteristic is found in the presence of considerably largenumber of buyers and sellers. The difference with competitive market is that unlike perfectcompetition sellers do not sell a homogenous product. With objective of capturing a greatermarket share, they differentiate their product as much as possible (Kirzner, 2015). Productdifferentiation is one of the key features of monopolistic competition. Each sellers is the ownerof its own brand and takes monopoly decision regarding their own product. The major brands inthe low calorie microwaveable food industry are Lean Cuisine, Healthy Choice and others (Bui,Kemp & Hamilton, 2015). As the low calorie microwaveable food industry has characteristics ofmonopolistically competitive market, the market plan or business strategy is to made keepingresembles with this form of market.
ECONOMICS OF GLOBALIZATION3In imperfectly competitive markets, seller optimize their interest using the market powerthey have enjoyed. The information of elasticity is helpful in developing a suitable business plan.Demand of low calorie frozen microwaveable firm depends on price of own product, price ofcompetitors product, Income per capita and number of microwave sold. Apart from own price,the price set by competitors is important in determining demand. In monopolistic competition,presence of substitute is very important. Before determining own price, the firm should considerits competitors product (Iyer & Church, 2018). In order to maximize sales volume, the firmshould target specific consumer group by segmenting the market according to preferences andother attributes. Location and economic status of customers are two important aspects of marketsegmentation. Buyers differs in terms of their behavioral pattern. Customers have differentpreference for brands, different buying frequency for products in the industry (Haaland &Venables, 2016). The specific characteristic of the market, preferences of buyers, nature andprice of competitors’ product all should be considered while designing business plan. Answer 2 Several factor causes a change in the market structure. Number of sellers and their marketpower vary in different market structure. Monopolistically competitive firms takes differentstrategies to differentiate their product. Some firms may capture a much larger share than itscompetitor does. As firms go bigger, the market power is concentrated in the hands of largefirms. The dominance of few large would transform the structure of the market to anoligopolistic market from the initial monopolistic structure (Parenti et al., 2017). The presence offew dominating firms is one factor that causes that change in the market framework. In theoligopoly market, firms always keep a close look at its competitor’s strategy, price andintroduction of new products. The firms usually follows strategy of its competitors. When firms
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