1. Q5.1 Describe some of the limitations of market experiments.
The limitations of market experiments can first be seen on their costs as they are very expensive. Market experiments are generally accounted for in the long run. The time to wait for results can be very dangerous for the company. Changing prices, promotion, production and distribution strategies by competitorswithin a given product can lure current consumers to the competition. A competitor may offer a product at a cheaper price and consumers may want to purchase the competitors product instead. The economy is constantly changing and this may lead inconclusive results within an experiment. Unforeseen weather conditions, strikes or layoffs of a given competitors workforce may provoke losses or gains tothe company conducting market experiments.
2. Q5.2 “When I go to the grocery store, I find cents-off coupons totally annoying. Why can’t they just cut the price and do away with the clutter?” Discuss this statement and explain why coupon promotions are an effective means of promotion for grocery retailers, and popular with many consumers.
Retailers have determined that when they placecent-off coupons for clients, clients tend to go to the grocery store to shop for the given article being discounted. According to sales projections, out of all of the coupons being sent out to the public in general, a 10% turn out of those coupons sent out produces 10% more in sales which actually turn out to be both lucrative and attractive for its customers. It has been determined that potentialconsumers love the idea of receiving coupons because they are informed of products being sold and on sale. Coupons are a means of cheap promotion.
3. Q5.3 Explain how shifting demand and supply curves make market demand estimation difficult.
The comparison and analysis of x variables and y variables and the difficulty with a demand relation provoke difficulty in determining what demandestimation may actually be. Since many factors influence the demand and supply curves, variables are somewhat difficult in understanding as to what the trend will be. Therefore, curves that shift will be difficult to understand unless you single out or identify one variable instead of 2.
4. Q5.4 “Rapid innovation in the development, assembly, and delivery of personal computers has led to asharply downward sloping market demand curve for Dell, Inc.” Discuss this statement.
The above question is misleading and inaccurate. In the past 20 years, a positive trend has been noted for many computer manufactures such as DELL. The demand curve for DELL should have a rightward shift in the demand curve which will indicate an increase in the demand for computers. If the question was accurate, asharply downward market demand would indicate that DELL is not selling or producing the proper amount of personal computers in order to stay alive and produce manufacturing profit/gain.
5. Q5.5 “Demand for higher education is highest among the wealthy. This has led to an upward sloping demand curve for college education. The higher the tuition charged, the greater is demand.” Discuss thisstatement.
This question is inaccurate. It has been noted that when income rises for individuals, they tend to shop for higher quality education. As people or students are willing to pay higher tuition costs, it will be noted that a rightward slope will be seen. This will indicate that both the rich and the poor are willing to pay for higher education. But it has to be noted that based on collegeattendees, the demand curve may stay the same or lower because prices will rise but not necessarily will attendees rise.
6. Q7.1 Is use of least-cost input combinations a necessary condition for profit maximization? Is it a sufficient condition? Explain.
Least cost input combinations are necessary but they do not dictate a company’s profit maximization point. It will be noted...