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Assignment MicroEconomics

Added on - 20 Sep 2019

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MICROECONOMICS
Microeconomics1Microeconomics studies the behavior of individual firms and consumers and study their behaviorin making decision regarding allocation of scare resources.First Case study is of food choices, New Steak on the Block, Steakhouses, and Butchers Serve upDifferent Cuts; Chuck Becomes a Flat Iron FiletSteakhouses are making changes in menu and redesigning their interior to attract morecustomers. There are varieties of new dishes added in the menu and so thus the price hike in themenu card. Improvement in taste put the extra burden on consumer pocket. New restaurantsusing different techniques to attract consumers they spend lavishly on an interior, hiring chef andpromoting their products through celebrities. They have only this choice to endorse their productas there are so many substitutes available in the market.There are many concepts used in above case study first is the market structure inmicroeconomics. There are the different market structure in an economy perfect competition,monopoly, monopolistic completion, oligopoly, duopoly, and monopsony. Different marketshave different features; the above case is a case of monopolistic completion; Monopolisticcompetition also called competitive market, where there is a large number of firms competingand selling the same product but with different feature. The products of different firms are notaltogether different; they are slightly different from others, each having a small proportion of themarket share. There are free entry and exit of firms in the monopolist competition, so there isalso market influences on sales and profit of the firm.The most different feature from other markets in monopolistic competition is selling cost: thecase study is all about selling cost that how food chains create a difference in their productspacking, promotions activities and adding different features. Producers have to incurred different
Microeconomics2types of expenditures; advertisement, campaign, and endorsement are the most importantconstituent of the selling cost which affects the demand as well as a cost of production. Thefocus of monopolist is to maximize profits and therefore, they adjust the expenditureaccordingly.Innovation and creating new product to stand out in the entire competitor in the market is the keyto capture the maximum profit in the market. Like the case study depicts Steakhouses tried toadopt into taste and new dishes into their menu card with different attracted names so that he willable to differentiate their products from existing products in the market. Likewise in the giventopics “Reviving McDonald”McDonald’sis planning to overhaul its U.S. menu by addingmorecustomizable options and appealingto regional tastes, a move that the world’s largest fast-foodchainsays is aimed atreinvigorating its business afteranother quarter of sinking profitsandsagging sales.In second case study: Kellogg's Breakfast Gamble. There is merge between Kellogg's with kashaco. in 2000 which leads to increase in kasha sales, kasha company sales had soared by 24 timesby launching the new product as per the new consumer taste.In this case, another market structure used for making the higher profit by producers, it is thecase of the cartel. A cartel is defined as a group of firms that gets together to make output andprice decisions, so thus the both breakfast companies did. Cartel arises when there are firmsselling a similar product and rivals of each other.Something merger leads to monopoly and helps in attaining maximum profit. Oligopolistic firmsjoin a cartel to increase their market power, and members work together to determine jointly thelevel of output that each member will produce and/or the price that each member will charge. By
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