How the market is likely to be affected by: a substantial cut in the price of branded ice tea
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- Thread Starter
- 03-03-2018 07:27
Offline19Very Important Poster
- Very Important Poster
- 03-03-2018 12:53
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.
- 04-03-2018 12:41
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.
Offline21ReputationRep:TSR Support TeamClearing and Applications Advisor
- TSR Support Team
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- 05-03-2018 18:32
- 07-03-2018 14:11
Does anybody know how does collusion lead to lower contestability?
- 11-03-2018 13:42
Please correct me if I’m mistaken