How will advertising affect the cartel - Page Chapter 5...

This preview shows page 1 - 11 out of 46 pages.

. Page.
Chapter 5
Chapter 5!.
Chapter 5.
.
Chapter 6.. ...
7.
8Chapter 7).How will advertising affect the cartel’s MC and AR curves? How will this affect the profit-maximisingoutput? Is there any problem here for the cartel in fixing the price?
If this ‘fair’ solution were adopted, what effect would it have on the industry?
( . What are the barriers to entry in (a) brewing; (b) opening new pubs?Answer
9Chapter 7(b)Market is already saturated in most areas; high cost of purchasing premises and fitting themout; fear of ‘unfair’ competition from existing pubs, most of which are tied to the largebreweries.Do small independent brewers have any market advantages?
Draw a pair of diagrams like those in Figure 7.4. Illustrate what would happen if there were a rise inmarket demand and no rise in the costs of either the leader or the followers. Would there be anequal percentage increase in the output of both leader and followers?
10Chapter 7

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture