Price Elasticity and Monopoly Plays a Vital Role
Added on -2021-02-21
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ECONOMICS
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Question 1........................................................................................................................................1Question 2........................................................................................................................................3CONCLUSION................................................................................................................................4REFERENCES................................................................................................................................5
INTRODUCTION Price elasticity and monopoly plays a vital role in every business as it directly reflects upon it’sposition as well as success in the market. The present report will focus on the the price elasticityestimates of three distinct products and the reason behind their high demand or price in themarker. Alongside, the report will also discuss the Monopoly power of Microsoft with a specificcase regarding the same.Question 1The three articles chosen for examining price elasticity relates to three different products –Gold, IPhones and Marlboro Cigarettes. “Growing Demand for Smokeless Products to Drive Altria's performance in the fourthquarter”, 2019. Altria Group Inc is one of the biggest tobacco corporations within the world will releaseits fourth quarter 2018 outcomes on January 31, 2019. The market is expecting Altria Group toattain net revenue of $4.82 billion, 2.3% higher as compared to growth achieved every year.$0.95 per share is expected as the adjusted earnings for the quarter in comparison $0.91 per sharein the previous year. The higher EPS is meant to be the outcome of increased prices of tobaccoproducts along with the growth in the smokeless products segment and better premium mixwithin the wine category. The company’s price estimate of $61.65 per share for the organisationwhich is higher in comparison to its present market price. As the young generation stoppedpurchasing cigarettes in a large number, the demand for same products has observed a continuesdecline in the US market recently. This is seen in a decreased in domestic cigarette shipmentwith 6.3% every year. In the same period of time volume of domestic cigarette industry alsodecreased by 4.5%. Altria’s Marlboro brand positioned itself continuously as a leading cigarettebrand in US with a 43.5% share in the tobacco market of the country. Cigarette is addictive innature which is the reason of its reduced price elasticity. Marlboro is not much vulnerable toprice hike as compared to other brands due to its impressive market share. This assist gathercompany in achieving growth even with decrease in volume of cigarettes sold in the market.“What Moves Gold Prices?” 2018The price of Gold fluctuates due to the combination of investor behaviour, supply anddemand. Most of the investors think of gold as an inflation hedge. Unless coffee or oil, gold is1
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