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(p. 327-328)Describe the types of competitive markets, and give an example of each. There are four types of competitive markets:1. Pure monopoly is exemplified by most electric utilities. A monopoly is one seller who sets the price for a unique product.2. Oligopoly is exemplified by Reynolds and Alcoa as sellers of aluminum. An oligopoly is few sellers who are sensitive to each other's prices.3. Monopolistic competition, exemplified by Skippy and Jif among dozens of brands of peanut butter. Monopolistic competition is many sellers who compete on nonprice factors.4. Pure competition is exemplified by George W. Childs' grain elevator, which is one of hundreds that sell corn whose price is set by the marketplace. Pure competition is many sellers who follow the market price for identical, commodity products.AACSB: 3LL: 2Learning Objective: 13-02 Recognize the objectives a firm has in setting prices and the constraints that restrict the range of prices a firm can charge13-223
Chapter 13 - Building the Price Foundation272.(p. 324-325)Describe a profit objective used by many Japanese firms. Managing for long-run profits is a pricing objective followed by many Japanese firms that are willing to forego immediate profits in cars, TV sets, or computers to develop quality products that can penetrate competitive markets in the future.AACSB: 3LL: 2Learning Objective: 13-02 Recognize the objectives a firm has in setting prices and the constraints that restrict the range of prices a firm can charge273.(p. 324-325)What are the six broad objectives that an organization may pursue which tie in directly to the organization's pricing policies? The six broad objectives that an organization may pursue which relate directly to the organization's pricing policies are profit, sales, market share, unit volume, survival, and social responsibility.AACSB: 3LL: 1Learning Objective: 13-02 Recognize the objectives a firm has in setting prices and the constraints that restrict the range of prices a firm can charge274.(p. 329)In the process of setting price, a marketer must first identify pricing objectives and constraints. Next, in Step 2 three specific estimates are necessary. What are they? The three key items in Step 2 are:demand estimation,sales revenue estimation, andprice elasticity estimation.AACSB: 3LL: 2Learning Objective: 13-03 Explain what a demand curve is and the role of revenues in pricing decisions13-224
Chapter 13 - Building the Price Foundation275.(p. 330)List four key factors used to estimate demand. Of course price is one factor. However, price is not the complete story in estimating demand. Economists stress three other key factors: consumer tastes (depend on many factors such as demographics, culture, and technology), price and availability of similar products, and consumer income.AACSB: 3LL: 2Learning Objective: 13-03 Explain what a demand curve is and the role of revenues in pricing decisions276.(p. 330)What is the difference between a movement along a demand curve and a shift of a demand curve?