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    How the market is likely to be affected by: a substantial cut in the price of branded ice tea
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    (Original post by monster9324)
    How the market is likely to be affected by: a substantial cut in the price of branded ice tea
    Depends on size of market, competitors, supply chain, price an demand from consumers. level of cut.

    If you make one product cheaper then for the producer you have to look at the implications- lower profit margins but potentially higher market share. It might increase sales in the short term and get people who drink other brands, non branded or other drinks to switch. market may also expand.

    On the other side lower profit margins may make it hard to make a profit and that could make people quit and find other products to sell. It may be unsustainable as well as unprofitable. That goes for manufacturers and suppliers.
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    Impact on substitutes, i.e. non-branded iced tea, iced coffee.

    Impact on complements, admittedly I don't really know what complements iced tea.

    Assuming the price cut is not the result of shifts in demand and supply, what would be the movements along each curve. Is this equilibrium?

    Whether the price cut will have a great impact (on quantity) depending on elasticities of demand and supply.
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    (Original post by monster9324)
    How the market is likely to be affected by: a substantial cut in the price of branded ice tea
    This is too broad. What market are you talking about, that of the tea or perhaps a substitute or complement?
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    Does anybody know how does collusion lead to lower contestability?
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    (Original post by bigdick 69)
    Does anybody know how does collusion lead to lower contestability?
    If I’m not mistaken a collusion typically leads to greater joint profits and lower costs for production (fewer inputs needed) so that reduces the attractiveness for hit and run entry making the market less contestable.

    Please correct me if I’m mistaken
 
 
 

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