You are an online seller of a product competing in a monopolistic competition type of market. Hence, you are more of a price-taker not exactly by choice but more because of the high price elasticity of the demand for your product. The current going-rate price range in the market is between P500 and P700. Your average cost per unit of the product is P600 while your average variable cost per unit of the product is P400. If the average going-rate price goes down to P300, what should you do? Why? If the average going-rate price pegs at P500, what should you do? Why? At the current going-rate price range of between P500 and P700, what strategies will enable you to increase your own selling price to P750 without losing many customers?

You are an online seller of a product competing in a monopolistic competition type of market. Hence, you are more of a price-taker not exactly by choice but more because of the high price elasticity of the demand for your product. The current going-rate price range in the market is between P500 and P700. Your average cost per unit of the product is P600 while your average variable cost per unit of the product is P400. If the average going-rate price goes down to P300, what should you do? Why? If the average going-rate price pegs at P500, what should you do? Why? At the current going-rate price range of between P500 and P700, what strategies will enable you to increase your own selling price to P750 without losing many customers?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter10: Prices, Output, And Strategy: Pure And Monopolistic Competition

Section: Chapter Questions

Problem 8E

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