Question
Read the Nestle article below and answer the following questions 1.A perfectly competitive firm is said to be a price taker. Explain why a monopolistically
Read the "Nestle" article below and answer the following questions
1.A perfectly competitive firm is said to be a "price taker." Explain why a monopolistically competitive a firm is not a price taker.
2.What is product differentiation? Why don't perfectly competitive firms use advertising to differentiate their products?
3.The article explained that Nestl's brands of water that are sold in the United States "...represented 44% of overall water sales last year and made an operating margin of just 5%..." To increase its operating margin, could Nestl increase the prices on the bottled water it sells in the U.S.? Explain why or why not.
4.The article mentioned that Nestl is considering "Acquisitions of sparkling ...waters with added minerals...that are growing in the U.S. at around 11% and 7% respectively..." Would the demand for sparkling water be more elastic or less inelastic than the demand for Nestl's current brands of water? Explain briefly.
5.Coca-Cola owns one of the world's most recognized brand names. The company employs people to visit restaurants and bars to order "Coke" or "a rum and Coke." If another cola drink is served, Coca-Cola's legal department sends a letter reminding business owners that "Coke" is a trademarked name. Why does Coca-Cola make this effort to protect its trademark name?
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