What kind of service or goods does your firm offer? Describe your business.
o French fries and ice cream!
o Small shops where people can just grab French fries or ice cream or both!
· Which market structure is your firm like to fall under? Explain why
o Monopolistic competition
What is allocative efficiency?
· Allocative efficiency is a situation in which the limited resources of a firm are allocated in accordance with the wishes of consumers. An allocatively efficient economy produces an “optimal mix” of commodities. A firm is allocatively efficient when its price is equal to its marginal cost in a perfect market.
What is productive efficiency?
· It is when production goes up but average cost decreases. (when you’re producing more at a cheaper price)
· Staying in the industry: Cost and revenue Models
Who are some of your competitors? Name these firms.
· Fast food (KFC, Macs, Burger King)
· Swensens
· Ice cream stores
· Stores that sell both
· When there are barriers to entry, it is difficult for firms to enter or exit the industry (106-109). In order to keep out new competition, your firm may want to erect barriers to entry. What kinds of barriers to entry are you going to erect for your firm? How do you go about doing it?
· Economies of scale- buy in bulk when the firm gets bigger
· Individualise our firm.
· Do research and development when starting up the company
· Must have a lot of knowledge on competitors
Using economies of scale is also a form of barriers to entry. Which types of economies of scale will your firm be trying to reap from?
· Risk –bearing economies of scale
· Technical economy
· Marketing economy
· Financial economy
· Administrative and managerial economy
· Well-fare and social economy
· Economies of scope
What kind of price or non-pricing competition (pg 123) will your firm engage in?
· Packing
· Publicity
· Give out freebies to people who spend a certain amount. Eg. Badges like Frolick
· Lucky draw!
· Reward cards
· Make a certain day half price day. Eg. Every Tuesday get a set at half price.
· Give students who have student card a 10% discount.
Are you going to practice price discrimination (pg 129) to gain more revenue?
· No as we feel it is unfair and think it should be equal for all.
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