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PRODUCT, FIRM AND INDUSTRY ANALYSIS For this assignment, choose a product or service. Feel free to use something produced by your current, former, or prospective
PRODUCT, FIRM AND INDUSTRY ANALYSIS
For this assignment, choose a product or service. Feel free to use something produced by your current, former, or prospective employer. For example, it may be a certain drug produced by Merck which operates in the pharmaceutical industry. Answer the following questions (3-5 pages total). Be sure to start each answer with a new paragraph or use question numbers.
- Describe the product/service: Is it a normal/inferior good? Is it a necessity/luxury? Does it have complements / substitutes?
- What specific factors influence the demand for the products/services by consumers (e.g.: advertising, weather, location, interest rates...)? Explain briefly how each of these factors influences demand for the product.
- What factors influence the supply of this product by the company? (e.g: cost of labor & components, technology). Explain how each factor affects the firms' willingness to sell the product.
- What fixed costs does the production of this product mostly likely include?
- What variable costs does the production include?
- Describe the firm and industry (your firm + all competitors): Is the industry perfectly competitive, monopolistically competitive, oligopoly or monopoly? Why do you think so?
- What are some of the barriers to entry for new firms in this industry?
- What strategies is the firm pursuing in order to stay competitive and profitable price cuts, bundle pricing, promotions, advertising to differentiate its products, lowering costs, etc?
- Explain how the firm can increase its profits by using price discrimination. What segments of the market could be charged higher / lower prices, and why? What might be your guess for the range of these prices?
- In part 2 and 3 you identified demand and supply shifters for your product. Choose one demand and one supply factor. Sketch two SD diagrams to illustrate how an increase in this factor will shift D or S curves, and what happens to the market P and Q in each case. Explain briefly.
Handwritten graphs are easier and faster than fancy graphs.
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