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Market Structure Of Dunkin Donuts Economics

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    Answer B. Starbucks debut of music download for clients is fundamentally a distinction scheme. The company wants to distinguish its merchandises and Servicess from rivals like Dunkin ‘ Donuts and Krispy Kane. The ultimate end of this scheme is to increase demand for the company ‘s merchandises by offering clients a batch of pick. Customers are ever attracted to new and advanced bundles offered by the companies. The scheme will assist Starbucks increase their client base and gain more net incomes which will finally increase their market demand and they can move as a major participant in the industry.

    Initially the houses were basking supranormal net incomes as shown by the green shaded country, but as new houses entered the market taking the advantage of supranormal net incomes, the market supply curve shifted downwards to s2, the market monetary value shifted down along with the equilibrium monetary value set by the houses. The extra houses increase production, which increases measure and so turn the supranormal net incomes into normal one

    Answer: The market for Microsoft stocks is absolutely competitory because a big figure of purchasers and Sellerss exist in the market for these stocks. Complete information is available to all the purchasers and Sellerss in the market and the entry in this market is free. All these factors wholly complement the absolutely competitory market.

    Answer: Microsoft ‘s stock faces a horizontal demand curve because the market for its stock is absolutely competitory, which means that P=MC =MR. Microsoft can sell all the units in the market at the market monetary value to all of its purchasers because of the utmost competition that prevails in the market.

    Answer: Harmonizing to the informations given in the instance, the lone thing that hindered the demand for hearing AIDSs was the consequence of its monetary value on the client ‘s budgeted income non covered by insurance. This factor contributed an elastic demand in the market for hearing AIDSs. However if the statute law sing the insurance coverage is passed so the demand for hearing AIDSs will increase well in the market. On the other manus the houses will increase the monetary values of hearing assistance in the market to take advantage of inelastic demand predominating in the market.

    Peoples below the age of 65 will happen the market state of affairs really unfavourable. This is because their costs will non be covered by Medicare public insurance and they will hold to purchase the hearing AIDSs at full monetary values. On the other manus few companies runing in the hearing assistance market will increase monetary values in revenge to the medical public insurance coverage for citizens transcending 65 old ages of age. This factor will multiply the impact of the medical jurisprudence on the citizens below the age of 65, because their demand will go more elastic.

    Answer: the individiual houses and consumers can non impact the market monetary value in the competitory market, therefore both are known as monetary value takers in the competitory market. Both the consumers and the houses accept the market monetary values as they are, and their actions will hold no consequence on the market monetary value. The houses in this market face a absolutely elastic demand curve becuase no 1 is willing to pay more than the market monetary value for the house ‘s end product. Similarly the consumers face a absolutely elastic supply curve. This is because houses are non willing to sell less than the market monetary value to any consumer.

    Macro economic influences include planetary economic conditions, Inflation, technological alteration, involvement rate fluctuations and domestic concern rhythm fluctuations. Example 1. A recession in Japan caused demand for merchandises in the economic system to fall. Which means that consumers will now purchase less merchandises due to deterioration in their economic conditions. Example 2. An addition in rising prices has pakistan has decreased the sum of disbursement in the economic system. This is becuase the buying power of a consumer is negatively affected by lifting proces for merchandises in the economy.Example 3. An addition in the involvement rates has caused a lessening in disbursement in the US economic system. Which means that the citizens are now interested in salvaging money becuase borrowing money from Bankss will now be dearly-won as the involvement rates have increased.

    Answer: Ten is a normal good becuase the quantitiy demanded of x is positively associated with the income factor. Therefore an addition in income will do an addition in the measure demanded of X. It is non an inferior good becuase in instance of an inferior good the measure demanded and income move in opposite waies, which means that an addition in semen will hold a negative consequence on the quantitiy demanded.

    Ten and Y are Substitutes. This is becuase the measure demanded for merchandise X is positvely related to the monetary value of Product Y. Which depicts that an addition in monetary value of merchandise Y will do an addition in the measure demanded for X.

    Yttrium and Z are Substitutes.This is becuase X and Y are substitues and X and Z are complementary goods. As Z and X are complementary goods so a rival for X will besides be a rival for Z. Hence proved that Y and Z are possible replacements

    Answer C: Steel and autos are complementary goods which means that an addition in demand of one will do a coincident addition in the demand for other. In the given instance the monetary value of steel is expected to fall, falling monetary values will do an addition in the demand for steel. On the other manus a lessening in the steel monetary values will do a lessening in the monetary values of autos, and the decreasing auto monetary values will do the demand for autos to increase in the car market.

    Answer: Price snap of demand measures the reactivity of the quantitiy demanded to the assorted factors that influence demand such as the monetary value of the merchandise, monetary value of substiute and complementary merchandises, and the income of the consumers. Price elesticity of demand helps the directors to find the impact of monetary value alterations on the grosss of the concern. This determination is of import becuase it helps the directors get a conscise position about the true snap of their merchandise and help them in doing the determinations consequently.

    Answer B: An addition in the monetary value of fresh juice and Shawerma is non a sufficient index to find whether the grosss will increase or non. Other factors like substiutes available, income of the consumers and the monetary value snap of demand demands to be determined in order to acquire a clear position of the market for the eating house. An addition in monetary values will merely be profitable if the demand for freash juice and shawerma offered by the Lebanese eating house is ineleastic. Therefore one disagree with the advice given to my friend.

    Answer: Entire Revenue = P x Q = 50000 ten 0.1 = $ 5000

    Entire Cost = Fixed cost + Variable cost

    = ( 1000+120 ) + ( 1200+2500+3000 ) = 1120 + 6700 = 7820

    Net income = Total gross – Entire cost = 5000 – 7820 = ( 2820 ) Loss

    Variable cost & A ; gt ; Entire Revenue ( 6700 & A ; gt ; 5000 ) .

    Looking at the computations above it is rather apparent that the concern is prone to do a loss in the approaching months, but the point to be noted here is that concern is non even able to cover its variable costs in the short tally. Assuming that the market for photoshop is absolutely competitory which means a house can run every bit long as it covers the variable costs. And as the photocopy shop is unable to cover the variable costs so it is non advisable for Ahmed to open his concern.

    Answer: The houses average entire cost takes into history both the norm fixed cost and the mean variable cost, and is fundamentally the amount of both mean fixed costs and mean variable costs. ( ATC=AFC+AVC ) . Therefore a alteration in the costs ireespective of the fact that the AFC does non alter will do a displacement in the Average entire cost curve. This is becase fixed costs are a portion of entire cost of production.Whereas in the instance of fringy cost curve which is the cost of adding one more unit of end product takes into history the variable factors of production such as labour. The fixed costs for adding any extra unit remain zero, this is becasue they are fixed whether a house produces extra units or non. Therefore, the fixed costs will hold no impact on the fringy cost curve.

    Answer: Fringy productiveness of labour is the extra end product produced by using an extra unit of labour. An addition in fringy productiveness of labour by an betterment in engineering will assist the house achieve economic systems of graduated table in the longrun. This means that the betterment in engineering will do Long Run Average Cost curve to switch downwards. On the other manus the fringy merchandise curve will switch upwards. The addition in the spread between fringy merchandise and fringy cost will increase the grosss generated by the concern in the long tally.

    . Answer. Fixed costs are indirectly related to the cost of goods manufactured and have to be paid whether the house is doing a net income or non. Higer fixed costs can turn out to be extremely hazardous for car companies if they are non doing sufficient grosss to get by with the entire costs. High fixed costs mean that the concern will hold to sell more merchandises in order to interrupt even at the point where MC=MR or Marginal cost = Marginal revenure

    Answer: The determinations will be made acording to the cost of factors in both the states. A capital intensive method of production will be used in instance of England. In capital intensive method of production a big sum of capital equipment is used comparative to other inputs for production. This is because the capital is comparatively cheaper to utilize in England as compared to labour. In instance of India where labour is comparatively inexpensive and the capital is comparatively expensive a labour intensive system of production will be implemented. In labour intensive method of production big sum of labour is used comparative to other factors of production. This system will be good in India because labour is comparatively inexpensive as compared to capital.

    . Answer: The Minimum Efficient Scale is the point where the long tally norm cost curves stop to worsen, and any futhur addition in production will do an addition in fringy cost of production. It is of import for each single house because it can help them in finding the optimal degree of production and will besides assist them indefining their bounds. After the MES the economic systems of graduated table is exhausted and diseconomies of graduated table occurs.

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