For each of the following, is the business a price-taking producer? Explain your answers. a.     A cappuccino café in a university town where there are dozens of very similar cappuccino cafés. b.     The makers of Pepsi-Cola. c.     One of many sellers of Durian fruits at a General Santos City’s public market.

Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter12: Monopoly
Section: Chapter Questions
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    For each of the following, is the business a price-taking producer? Explain your answers. a.     A cappuccino café in a university town where there are dozens of very similar cappuccino cafés. b.     The makers of Pepsi-Cola. c.     One of many sellers of Durian fruits at a General Santos City’s public market.   2.     How does branding relate to competitive advantage? Why do all firms not brand their goods, if this enables them to raise their price?   3.     Explain the meaning and significance of the concept of perceived value. How is it related to the strategy of prestige pricing?   4.     Explain the relationship between strategic moves, commitment and credibility.   5.     Explain why OPEC has been one of the most successful cartels in recent decades. What factors have limited this success?   Why is perfect competition normally regarded as being ‘better’ than monopoly?
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