Iscussion 7economics-pricing strategies
Identify the pricing and output strategies that maximize stockholder wealth in a purely competitive market
As discussed, the individual firm in a purely competitive industry is a price taker because the products of every producer are perfect substitutes. Therefore, the manager in a purely competitive market structure can only design strategies for her output. In the following assignment, consider the production decisions you might make in a purely competitive market.
Please respond to all of the following prompts in the class discussion section of your online course:
Name some products that you believe participate in a purely competitive market structure. Explain your reasoning.
How would you determine how much product to produce?
How do you characterize the price elasticity in a purely competitive market?
What do you think would happen if your competitors changed their prices? That is, how would you characterize the cross-price elasticity for your product?