Eco550 Wk6

ECO550 WK6 DQ1
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ECO550 WK6 DQ1
Monopolies
A comp every acting as a monopoly is unrivaled that controls the entire merchandise (Richard, 1992). This ac society does not have any competition whatsoever. The connection determines the price of its products, nevertheless the let onput to produce. The openhanded will in production and pricing is derived from the fact that in that location is no competition. The economies of scale of such a phoner, makes it to always argue to maintain the monopoly status.
When there is a saucy competitor in the market place, the company has to adjust its pricing strategy to either maintain its customers and profits, or force the new competitor step forward of the market. There are several ways in which the company can change its pricing strategy. On the fore, the company whitethorn decrease its price to very low levels that the new blind drunk cannot cope up with the price war. This is only in the neat run so as to drive the competitor out of the market. The existing company has the capacity to produce more and graceful the increasing demand of its products. Since the latter company is joining the market for the first time it will not be commensurate to charge low prices.
Decreasing the product price whitethorn not be the better option if the new steadfastly comes with novel ideas and highschool quality products.



Another approach is that the company may opt for price discrimination. Price discrimination is a situation where different consumers in completely different markets are charged different prices. This may compensate for the competition, since the new may not have established in all areas. The company may lower their prices where the competitor has wide coverage, and charge high prices in area where it still operates as a monopoly.
When new competition completely enters the market in the long run, the company has to strategize on its efficiency. Monopolies generally produce low output as compared to the market demand, and charge high prices for their products. In most cases...If you privation to get a full essay, order it on our website: Orderessay



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