Wednesday, October 7, 2009
Monday, May 4, 2009
My super startup done by quan de, yuan kai, ian lee
What we do
Café by the Side” is a small company the signs contracts with larger firms whose outlets usually have a long queue.
We provide a stylish yet comfortable waiting environment for their customers.
This includes music, nice chairs and delicious hot food and drinks
We will locate ourselves just outside shops at the entrance as part of the entrance into the shop, we provide an area of rest in shopping malls and long queue lines.
Market structure
•We are a Monopoly, meaning that we have complete control over the market, and can infulence the price of our services greatly unless other companies join.
•This is probably because this is a new and innovative ideaWhat is allocative efficiency?•Allocative efficiency in monopolistic competition. •Allocative efficiency is the level where the output is the highest and the cost is the lowest. The resources of the company are used to its optimum levelWhat is productive efficiency? •Productive efficiency in a monopolistic competition. •Production is when the company can produce the maximum amount of goods with the minimum cost. notOur Competitors Our competitors would be other companies that would choose to enter the market.The barriers to entry are few, as anyone can enter this industry with the capital required.An example is vending machines, that are supposed to be more efficient than us, but providing less service and customer relations.How we stay in the game! • When there are barriers to entry, it is difficult for firms to enter or leave the industry. •We will make our brand famous by putting up advertisements even though there are no competitors yet. • It is to secure brand loyalty and to make sure even after other competitors have come into the same industry, they will soon collapse as our company has a familiar brand name and customers who recognise us will most probably stay with our products as it is brand loyalty. • We will have patents to stop other people from having the same business as us and after our patent expires, we will have a very famous name and will stay in the market as more people will know us rather than new companies which they might not trust.Which types of economies of scale we reap from?•We will have specialisation as there will be a particular person to be the cashier, another person to brew the coffee and different people for different jobs in the company. We will have coffee brewing machines to maximise profits as it will take a shorter time for the coffee to be brewed and in the long run, we will buy more coffee brewing machines to increase our productivity rate even more.because this is a new and innovative idea which has not been done before.
price discrimination
•Yes. We will practice price discrimination. This is to enable us to gain more profits. We will change the pricing to accommodate the current economy and also different prices depending upon how much our customers purchase
Done by: Ian Lee, Quan De, Yuan Kai
Monday, April 27, 2009
NICK ANNA SIZE AND SHIH CHERN (super start-up)
1. What kind of services or goods does your firm offer? Describe your business.
The company we represent is called “Nicholas’ Nails”, a firm which specializes in a specific beauty service for both males and females - this service being express manicures and pedicures to people searching for a quick yet entirely rejuvenating nail spa session in revitalizing surroundings in the midst of the hustle and bustle of busy city life. By specialising in one particular area of the beauty industry, our company feels that through this method of specialization we are able to provide a service of unchallengeable quality that few other firms will be able to compete with.
2. Which market structure is your firm like to fall under? Explain why.
It is likely to fall under monopolistic competition, because unlike the market structure of perfect competition, there is the occurrence of product differentiation due to our company name, which exists when a good or in this case, a service, is perceived to differ from other services. This difference arrives from the product’s brand name, colour, appearance, quality of service etc. Thus, our firm “Nicholas’ Nails”, falls under monopolistic competition.
3. What is allocative efficiency?
Such a measure of efficieny is also commonly known as the socially optimum level of output, and it occurs when suppliers produce the optimal level of goods and services demanded by the consumers. The value consumers place on goods or services is reflected in the price they are willing to pay for that product, and it is equal to the cost of the resources that were used up during the production period of that good. The condition required for allocative efficiency to take place is that the average revenue must be equal to the marginal cost, which is the cost of producing one more unit of a product. When this condition is satisfied, total economic welfare can be maximised.
4. What is productive efficiency?
It is when a firm produces a good or service at the lowest possible unit cost, where the marginal cost is equal to the average cost.
Staying in the Industry: Cost and revenue Models
1. Who are some of your competitors? Name these firms.
Secret Chamber Nails
Nailz Story
De Nailz Spa @ Roxy Square
Sophistique Home Salon
2. When there are barriers to entry, it is difficult for firms to enter or exit the industry. (pg 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?
As the business we are starting up is not a very costly and complicated business to build up, we would expect many competitions to grow and follow our footsteps. Therefore, to always stay ahead in the market, I would suggest that in order to stay in advantage of others we create better incentives for the costumers, for example, providing better, more specialized services (concentrating solely on express manicures and pedicures) or create an annual event which would help garner support, thus promoting the company. Advertising for the firm is also important – advertisements on the television, ads placed in the local newspapers and clips announced through the radio are just a few examples. Developing brand loyalty, also, would enable our firm to overcome any barriers of entry our firm might come against. By garnering a huge brand loyalty, other firms may feel threatened by our firm and either pull out from the industry or decide not to even venture into it in the first place. Becoming known for certain things, for example, providing an extremely efficient and high-quality service, would no doubt lead to our firm developing a fantastic reputation which few will be able to compare with.
3. 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.
Marketing economy
Financial economy
4. What kind of price or non-pricing competition (pg 123) will your firm engage in?
The firm will hold annual or maybe even monthly events, for example lucky draws or other games which promise attractive prizes which would appeal to people. Advertising and special services, falling under non-price competition, would also help to garner support and loyalty. For example, a loyalty card could be extended to customers who are willing to pay an extra price in exchange for discounts and extra services that are provided especially for card holders. Weekly promotions would further help to entice consumers to return to the firm and compete with other firms offering similar services. By bulk buying resources and other various materials to get a discount, our firm will also be able to provide our services for cheaper/ lower prices than other firms offer.
5. Are you going to practice price discrimination (pg 129) to gain more revenue?
No we will not, because we will be hiring skilled and experienced workers. We will strive to provide the best possible service there is to our consumers which will therefore guarantee consumer satisfaction. People will therefore not be opposed to paying a slightly higher price in exchange for such high-quality and express services.
The company we represent is called “Nicholas’ Nails”, a firm which specializes in a specific beauty service for both males and females - this service being express manicures and pedicures to people searching for a quick yet entirely rejuvenating nail spa session in revitalizing surroundings in the midst of the hustle and bustle of busy city life. By specialising in one particular area of the beauty industry, our company feels that through this method of specialization we are able to provide a service of unchallengeable quality that few other firms will be able to compete with.
2. Which market structure is your firm like to fall under? Explain why.
It is likely to fall under monopolistic competition, because unlike the market structure of perfect competition, there is the occurrence of product differentiation due to our company name, which exists when a good or in this case, a service, is perceived to differ from other services. This difference arrives from the product’s brand name, colour, appearance, quality of service etc. Thus, our firm “Nicholas’ Nails”, falls under monopolistic competition.
3. What is allocative efficiency?
Such a measure of efficieny is also commonly known as the socially optimum level of output, and it occurs when suppliers produce the optimal level of goods and services demanded by the consumers. The value consumers place on goods or services is reflected in the price they are willing to pay for that product, and it is equal to the cost of the resources that were used up during the production period of that good. The condition required for allocative efficiency to take place is that the average revenue must be equal to the marginal cost, which is the cost of producing one more unit of a product. When this condition is satisfied, total economic welfare can be maximised.
4. What is productive efficiency?
It is when a firm produces a good or service at the lowest possible unit cost, where the marginal cost is equal to the average cost.
Staying in the Industry: Cost and revenue Models
1. Who are some of your competitors? Name these firms.
Secret Chamber Nails
Nailz Story
De Nailz Spa @ Roxy Square
Sophistique Home Salon
2. When there are barriers to entry, it is difficult for firms to enter or exit the industry. (pg 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?
As the business we are starting up is not a very costly and complicated business to build up, we would expect many competitions to grow and follow our footsteps. Therefore, to always stay ahead in the market, I would suggest that in order to stay in advantage of others we create better incentives for the costumers, for example, providing better, more specialized services (concentrating solely on express manicures and pedicures) or create an annual event which would help garner support, thus promoting the company. Advertising for the firm is also important – advertisements on the television, ads placed in the local newspapers and clips announced through the radio are just a few examples. Developing brand loyalty, also, would enable our firm to overcome any barriers of entry our firm might come against. By garnering a huge brand loyalty, other firms may feel threatened by our firm and either pull out from the industry or decide not to even venture into it in the first place. Becoming known for certain things, for example, providing an extremely efficient and high-quality service, would no doubt lead to our firm developing a fantastic reputation which few will be able to compare with.
3. 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.
Marketing economy
Financial economy
4. What kind of price or non-pricing competition (pg 123) will your firm engage in?
The firm will hold annual or maybe even monthly events, for example lucky draws or other games which promise attractive prizes which would appeal to people. Advertising and special services, falling under non-price competition, would also help to garner support and loyalty. For example, a loyalty card could be extended to customers who are willing to pay an extra price in exchange for discounts and extra services that are provided especially for card holders. Weekly promotions would further help to entice consumers to return to the firm and compete with other firms offering similar services. By bulk buying resources and other various materials to get a discount, our firm will also be able to provide our services for cheaper/ lower prices than other firms offer.
5. Are you going to practice price discrimination (pg 129) to gain more revenue?
No we will not, because we will be hiring skilled and experienced workers. We will strive to provide the best possible service there is to our consumers which will therefore guarantee consumer satisfaction. People will therefore not be opposed to paying a slightly higher price in exchange for such high-quality and express services.
Start-up
Div-En
Getting down to basics
1. Our firm starts up at a beach in Miami whereby we can sell aquatic sport goods as well as other services such as rental of surfboards. We have a wide range of aquatic goods for children as well as the elderly. We also provide rental of scuba diving equipment (air tank, flippers etc.), wakeboards plus scuba diving lessons. Prices of our goods would be slightly below market price as well as ensuring goods are in good quality so that we can make it more affordable for everyone, increasing demand for our goods.
1. Our firm starts up at a beach in Miami whereby we can sell aquatic sport goods as well as other services such as rental of surfboards. We have a wide range of aquatic goods for children as well as the elderly. We also provide rental of scuba diving equipment (air tank, flippers etc.), wakeboards plus scuba diving lessons. Prices of our goods would be slightly below market price as well as ensuring goods are in good quality so that we can make it more affordable for everyone, increasing demand for our goods.
2. Our firm will likely to fall under monopolistic competition. Even though there are a large number of independent firms producing similar goods. There are many market participants in our market. ie many buyers and sellers in these markets. Our firm will generate our own market price because they have more market power over the product they sell since each product is slightly differentiated. The firm we set up in the market will incur advertising costs to market our slightly differentiated products from other firms and to inculcate brand loyalty among our customers. The products we produced would be substitutes since other firms are producing the same good.
3. Allocate efficiency occurs where suppliers are producing the optimal mix of goods and services required by consumers.
4. Productive efficiency is when a firm produces its product at the lowest possible unit cost (average cost)
Who are your competitors?
1. Arena, Speedo, Ken Done, Billabong, Roxy, Quicksilver, Ocean Pacific.
Who are your competitors?
1. Arena, Speedo, Ken Done, Billabong, Roxy, Quicksilver, Ocean Pacific.
2. Brand loyalty. Produce products that are sui generis and ground-breaking so that consumers are loyal to the brand. E.g. we can produce swimsuits with the latest designs, produce diving gear that is more advanced in technology and safer than other brands, more buoyant floatation devices. Also we must gain the customer’s trust. Make good first impression by giving good service and making price relatively low. Make designs of sport wear with good quality materials as well as make it nice and catchy. Trust in the brand makes people want to buy products. Advertisements must be truthful, deliver value, and resonate with consumers. Advertisements must also be catchy and appealing to consumers. By capitalizing on first impressions, the firm can start building trust with their customers and prospects. Receiving feedback is a gain knowledge and tremendous insight, allowing us to be able to provide better goods and service to the consumers.
3. Internal economies of scale. As a source of monopoly power/ barrier to entry, economies of scale occurs when increasing of the scale of production leads to lower cost per unit of output.
To expand the output along the SRAC, our firm moves down along the u-shaped SRAC. Before the minimum point is reached, we should consider building a new outlet/plant in order to enjoy economies of scale on another larger outlet/plant. This is because successive new outlets have lower SRAC. The LRAC can be constructed from this succession of SRAC curves.
The economies of scale classified in some factors:
· Division of labour
· Indivisibilities
· Research and development
· Distribution
· More means of raising funds.
· Bulk-buying
· Advertising
· Credit worthiness
4. Our firm will be practicing non-pricing competition. We will offer memberships to give our customers discounts to our goods and services. Our firm will sponsor swimming competitions such as Fina/Arena and the Olympics include special features in our goods such as less resistant swimsuits. Also we can advertise on television, radio as well as billboards to feature our products and what services we provide as well.
3. Internal economies of scale. As a source of monopoly power/ barrier to entry, economies of scale occurs when increasing of the scale of production leads to lower cost per unit of output.
To expand the output along the SRAC, our firm moves down along the u-shaped SRAC. Before the minimum point is reached, we should consider building a new outlet/plant in order to enjoy economies of scale on another larger outlet/plant. This is because successive new outlets have lower SRAC. The LRAC can be constructed from this succession of SRAC curves.
The economies of scale classified in some factors:
· Division of labour
· Indivisibilities
· Research and development
· Distribution
· More means of raising funds.
· Bulk-buying
· Advertising
· Credit worthiness
4. Our firm will be practicing non-pricing competition. We will offer memberships to give our customers discounts to our goods and services. Our firm will sponsor swimming competitions such as Fina/Arena and the Olympics include special features in our goods such as less resistant swimsuits. Also we can advertise on television, radio as well as billboards to feature our products and what services we provide as well.
5. Yes, we will practice price discrimination. Offer children and senior citizens cheaper prices for goods as well as cheaper rates for rentals so that children get special benefits in comparison with older people. Moreover, during peak season offer make prices high while during off season make prices low. We also have memberships to give our members privileges.
Members: Iijee, Isaac, Darren, Vu and Nam.
Super Start Up - Mister Donut
1) What kind of services or goods does your firm offer. Describe your business.
Name of company: Mister Donut
We are selling doughnuts and coffee where we sell them in a standalone stall. Mister Donut is a franchise of the popular chain in Japan and Taiwan. A franchise is that uses one's branding and follows their practices as well as their business philosophy. They are given the rights to distribute the products, techniques and trademarks with a royalty fee.
2) Which market structure is your firm like to fall under? Explain why.
We are a firm that is in a monopolistic competition as there are quite a large number of firms in in this line of business. There is a slight difference in our products compared with our competitors and there are no barriers of entry into this line of business.
3) What is allocative efficiency?
It is a situation where the current combination of goods produced and sold gives the maximum satisfaction for each consumer at their current levels of income. In a business, the allocative efficiency will be increased as long as increasing the activity involves a greater marginal benefit than marginal cost and will eventually will reach its optimum efficiency level.
4) What is productive efficiency?
It is a situation where firms are producing their output at its minimum cost, or producing the maximum output for a given amount of inputs.
5) Who are some of your competitors? Name these firms.
We have many competitors since there are a lot of doughnut shops around. The largest competitors include Donut Factory, J.CO Donuts and Coffee, Donut Empire, Dippin Donut and Missy Donut.
6) When there are barriers to entry, it is difficult for firms to enter or exit the industry. 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?
We will exploit economies of scale, particularly marketing economies and risk-bearing economies. We will open branches to increase output and profit and diversify into other products and dining concepts as well. That said, we will increase our input in the long-run. Set up our first stall in a high traffic volume location to have a strong customer base in order to remain profitable. We will try to have a strong brand name here which will be easier since it is a franchise where it has been well established in other markets. We will use this to our own advantage and have customers who will continue to have brand loyalty even if other shops open. This will be done by introducing new flavours into the market and by selling a larger variety of food items e.g. sandwiches and ice-cream in the long run. Also, we will advertise frequently in order to attract new customers in order to keep customers loyal and increase our customer base. We will also have offers such as buy one get one free or a free coffee with a purchase of the doughnut occasionally. This will make them return as they are able to stretch their dollar here since they are actually paying less compared to other shops where they have to pay seperately for both the doughnut and the coffee.
7) 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?
We will be using internal economies of scale where our long run average costs will fall as more units of input is added to produce a larger amount of output. This results in an increasing returns to scale as our short We will primarily use marketing and risk-bearing economies, but will also be exploiting other forms of economies of scale.
Marketing economies:
When our firm increases it size, we will start to buy in bulk as we will start to see a decrease in our costs due to the discounts and will be able to earn a larger profit rather than buying in small quantities. Also, we are able to advertise more than the newcomers as we are much larger in size and have an advantage over them as we have built up a strong brand name for ourselves where we have a loyal following of customers. Compared to the start-ups, our cost of advertising is actually low albeit we do spend a lot on advertising in order to increase our customer base (to know of our existence) as well as profits and output. Our advertising cost per unit of output is likely to be much lower than that of a small doughnut shop.
Technical economies:
We are able to practice division of labour and fully utilise our machines (capital) compared to small doughnut shops as we will use machinery much more efficiently than others. We are able to divide the work among the workers and this raises productivity as well as decreases our labour costs.
Risk-bearing economies:
We are able to diversify into selling other doughnut-related products, savoury foodstuff or other desserts as well if necessary. More outlets could be opened to increase our output and profits and we are able to spread our risks should one outlet's business fail to suffer and we still have other outlets to remain in the black. A cafe could be opened to increase our output so that they can have a place to sit down and enjoy their purchase. If the demand for doughnuts decreases, we could always rely on other products to remain profitable as a result of selling a variety of products.
Economies of scope:
We are able to produce our doughnuts and coffee much cheaper compared to a shop that simply sells doughnuts where our overhead costs and financial economies can be shared among the products. We are thus able to benefit from the shared marketing and distributing costs of selling doughnuts and coffee compared to simply selling doughnuts.
Administrative economies:
We are able to hire more specialist staff such as sales managers, food consultants, and accountants to deal with various positions in our firm. This will then improve productivity and efficiency as specialisation allows everyone to work what they are best at. This allows us to reduce our costs as a result and have a good management team.
8) What kind of price or non-pricing competition (pg 123) will your firm engage in?
We are engaged in non-pricing competition which is competition that is in terms of advertising or product development. We do this as it is more profitable than selling at a lower price generally even though there will be an increase in the costs. We will distribute flyers where they could exchange it for a free doughnut/coffee or get one at a discounted price. We will also constantly advertise in different media outlets when we have promotion or have opened another outlet to increase our profits and to have a good brand name. This will lead to an increase in the demand for our products as well as our total revenue since we are able to persuade consumers to purchase our products by having promotions occasionally.
9) Are you going to practice price discrimination (pg 129) to gain more revenue?
Name of company: Mister Donut
We are selling doughnuts and coffee where we sell them in a standalone stall. Mister Donut is a franchise of the popular chain in Japan and Taiwan. A franchise is that uses one's branding and follows their practices as well as their business philosophy. They are given the rights to distribute the products, techniques and trademarks with a royalty fee.
2) Which market structure is your firm like to fall under? Explain why.
We are a firm that is in a monopolistic competition as there are quite a large number of firms in in this line of business. There is a slight difference in our products compared with our competitors and there are no barriers of entry into this line of business.
3) What is allocative efficiency?
It is a situation where the current combination of goods produced and sold gives the maximum satisfaction for each consumer at their current levels of income. In a business, the allocative efficiency will be increased as long as increasing the activity involves a greater marginal benefit than marginal cost and will eventually will reach its optimum efficiency level.
4) What is productive efficiency?
It is a situation where firms are producing their output at its minimum cost, or producing the maximum output for a given amount of inputs.
5) Who are some of your competitors? Name these firms.
We have many competitors since there are a lot of doughnut shops around. The largest competitors include Donut Factory, J.CO Donuts and Coffee, Donut Empire, Dippin Donut and Missy Donut.
6) When there are barriers to entry, it is difficult for firms to enter or exit the industry. 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?
We will exploit economies of scale, particularly marketing economies and risk-bearing economies. We will open branches to increase output and profit and diversify into other products and dining concepts as well. That said, we will increase our input in the long-run. Set up our first stall in a high traffic volume location to have a strong customer base in order to remain profitable. We will try to have a strong brand name here which will be easier since it is a franchise where it has been well established in other markets. We will use this to our own advantage and have customers who will continue to have brand loyalty even if other shops open. This will be done by introducing new flavours into the market and by selling a larger variety of food items e.g. sandwiches and ice-cream in the long run. Also, we will advertise frequently in order to attract new customers in order to keep customers loyal and increase our customer base. We will also have offers such as buy one get one free or a free coffee with a purchase of the doughnut occasionally. This will make them return as they are able to stretch their dollar here since they are actually paying less compared to other shops where they have to pay seperately for both the doughnut and the coffee.
7) 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?
We will be using internal economies of scale where our long run average costs will fall as more units of input is added to produce a larger amount of output. This results in an increasing returns to scale as our short We will primarily use marketing and risk-bearing economies, but will also be exploiting other forms of economies of scale.
Marketing economies:
When our firm increases it size, we will start to buy in bulk as we will start to see a decrease in our costs due to the discounts and will be able to earn a larger profit rather than buying in small quantities. Also, we are able to advertise more than the newcomers as we are much larger in size and have an advantage over them as we have built up a strong brand name for ourselves where we have a loyal following of customers. Compared to the start-ups, our cost of advertising is actually low albeit we do spend a lot on advertising in order to increase our customer base (to know of our existence) as well as profits and output. Our advertising cost per unit of output is likely to be much lower than that of a small doughnut shop.
Technical economies:
We are able to practice division of labour and fully utilise our machines (capital) compared to small doughnut shops as we will use machinery much more efficiently than others. We are able to divide the work among the workers and this raises productivity as well as decreases our labour costs.
Risk-bearing economies:
We are able to diversify into selling other doughnut-related products, savoury foodstuff or other desserts as well if necessary. More outlets could be opened to increase our output and profits and we are able to spread our risks should one outlet's business fail to suffer and we still have other outlets to remain in the black. A cafe could be opened to increase our output so that they can have a place to sit down and enjoy their purchase. If the demand for doughnuts decreases, we could always rely on other products to remain profitable as a result of selling a variety of products.
Economies of scope:
We are able to produce our doughnuts and coffee much cheaper compared to a shop that simply sells doughnuts where our overhead costs and financial economies can be shared among the products. We are thus able to benefit from the shared marketing and distributing costs of selling doughnuts and coffee compared to simply selling doughnuts.
Administrative economies:
We are able to hire more specialist staff such as sales managers, food consultants, and accountants to deal with various positions in our firm. This will then improve productivity and efficiency as specialisation allows everyone to work what they are best at. This allows us to reduce our costs as a result and have a good management team.
8) What kind of price or non-pricing competition (pg 123) will your firm engage in?
We are engaged in non-pricing competition which is competition that is in terms of advertising or product development. We do this as it is more profitable than selling at a lower price generally even though there will be an increase in the costs. We will distribute flyers where they could exchange it for a free doughnut/coffee or get one at a discounted price. We will also constantly advertise in different media outlets when we have promotion or have opened another outlet to increase our profits and to have a good brand name. This will lead to an increase in the demand for our products as well as our total revenue since we are able to persuade consumers to purchase our products by having promotions occasionally.
9) Are you going to practice price discrimination (pg 129) to gain more revenue?
We are using second degree price discrimination where we charge consumers different prices based on how much they purchase. It will be cheaper to buy a dozen doughnuts than half a dozen doughnuts on average as we charge a lower price for buying a box of one dozen of doughnuts compared to buying half a dozen doughnuts. Thus, it is more expensive to just buy one doughnut compared to half or a dozen of them. This will be beneficial to us as we will gain more revenue and will be able to maximise our output and profit.
E-Milk Bottles
Company name: Elementary Milk Bottles (E-Milk bottles)
E-Milk bottles specializes in making milk bottles for children below 8 years old. This good is essential around every developed and developing country thus I would conclude that the market structure of my firm will fall under perfect competition. E-Milk bottles is a small firm relative to the size of the industry. It is not capable of altering its own output to have noticeable effect in the economy as a whole. E-Milk bottles cannot affect the supply curve of the industry and so cannot affect the price of product. E-Milk bottles have to sell its bottles at whatever price set by the demand and supply in the industry. E-Milk bottles can also be known as “price takers”.
E-Milk bottles cannot raise prices above the current market price as other firms will not follow and hence causing them to loose trade sales and probably profits. E-Milk bottles also cannot lower its prices below cruent market price as other firms will not follow, undercutting them, and so creating a price may cause harm to all firms.
Allocative efficiency occurs where suppliers are producing the optimal mix of good and services required by consumers, when marginal cost is equal to average revenue.
Productive efficiency is when a firm producers its product at the lowest possible unit cost. This can be done by combining all resources and making them as efficient as possible and not be wasted by inefficient use.
Since E-Milk bottles is in the perfect competition, the number of competitors she encounters is uncountable. For example, “tiger”, “kids”, “lion”, etc. All these other firms produces the exact identical goods and hence it is not possible to distinguish a good produced from one firm and a good produced from another. Furthermore, these market does not intend to make its good different from each other.
There are no barries to enter nor exit. E-Milk bottles is completely free to enter or leave the industry. However, this also mean that one cannot stop another firm from entering or leaving the industry too.
There are a few factors that E-Milk bottles may want to improvise in order to obtain a better product or a more favorable product to the public. This may be price or non-price competition which E-Milk bottles may be engaged in during the near future. Firstly, a brand name, creating and developing a brand loyalty to the public, this will eventually increase demand for that good. This can be done by packaging, special features, sales promotion and sponsorship deals.
Lastly, E-Milk bottles would not practice price discrimination to gain more revenue as she believes its unfair to some and that E-Milk bottles has to mantian her loyalty to all her customers.
Done by: Emily Yiu, Michael Chu, Mark Ho
^.^
E-Milk bottles specializes in making milk bottles for children below 8 years old. This good is essential around every developed and developing country thus I would conclude that the market structure of my firm will fall under perfect competition. E-Milk bottles is a small firm relative to the size of the industry. It is not capable of altering its own output to have noticeable effect in the economy as a whole. E-Milk bottles cannot affect the supply curve of the industry and so cannot affect the price of product. E-Milk bottles have to sell its bottles at whatever price set by the demand and supply in the industry. E-Milk bottles can also be known as “price takers”.
E-Milk bottles cannot raise prices above the current market price as other firms will not follow and hence causing them to loose trade sales and probably profits. E-Milk bottles also cannot lower its prices below cruent market price as other firms will not follow, undercutting them, and so creating a price may cause harm to all firms.
Allocative efficiency occurs where suppliers are producing the optimal mix of good and services required by consumers, when marginal cost is equal to average revenue.
Productive efficiency is when a firm producers its product at the lowest possible unit cost. This can be done by combining all resources and making them as efficient as possible and not be wasted by inefficient use.
Since E-Milk bottles is in the perfect competition, the number of competitors she encounters is uncountable. For example, “tiger”, “kids”, “lion”, etc. All these other firms produces the exact identical goods and hence it is not possible to distinguish a good produced from one firm and a good produced from another. Furthermore, these market does not intend to make its good different from each other.
There are no barries to enter nor exit. E-Milk bottles is completely free to enter or leave the industry. However, this also mean that one cannot stop another firm from entering or leaving the industry too.
There are a few factors that E-Milk bottles may want to improvise in order to obtain a better product or a more favorable product to the public. This may be price or non-price competition which E-Milk bottles may be engaged in during the near future. Firstly, a brand name, creating and developing a brand loyalty to the public, this will eventually increase demand for that good. This can be done by packaging, special features, sales promotion and sponsorship deals.
Lastly, E-Milk bottles would not practice price discrimination to gain more revenue as she believes its unfair to some and that E-Milk bottles has to mantian her loyalty to all her customers.
Done by: Emily Yiu, Michael Chu, Mark Ho
^.^
Sibola: Our super start up
By: Kai En, Yan Ze, Hans, John, Fukumi
1. What kind of services or goods does your firm offer. Describe your business.
Our service will be a casino in Venice, Italy called Sibola, after the city of gold, or El Dorado. We will provide beverages of all sorts including Original Aztec drinks, water will be provided free of charge. Legendary Aztec food will be sold as well, such as Gold Cheese and Gold painted Prata. Typical Casino games will be placed in the heart of the casino. These games are; Slots, Poker, Black Jack and Roulettes. Entertainment will be provided, Hard Rock style, meaning popular live bands and/or upcoming artists that we, the management, feel appropriate. There will be an indoor river flowing about the width of a meter throughout the casino as décor. Also, there will be super tight security throughout the casino because it is indeed, a casino.
For future Investments, we plan to extend our casino into a hotel- Moulin rouge versus Aztec Gold Style which will hopefully include a Waterfall and a Gondola, like in Venice.
2. Which market structure is your firm likely to form under? Why?
It will be an Oligopoly because it will be a rather large firm and there aren’t many casinos in Rome. This will give us an advantage in the market.
3. What Is allocative efficiency? This is in a perfect competition. It is when the resources are allocated so that there is a maximum amount of production and profit, or largest ‘net benefit’.
4. What is productive efficiency? This is when production of a product is at its lowest price.
5. Who are some of your competitors?
Name of these firms: Palazzo Vendranin- Calergi, Ca’Nog Hera, Casino de Venetia. These will be our main competitors in Venice as they are fellow Casinos.
6. Barriers to Entry:
We are going to try to monopolize the Casino market in Venice so that we will get all the gamblers and customers. We are going to do this by introducing a privilege card which offers private rooms and such. Also we will have things on offer, or good deals that can be only found in our casino. We will try to induce Brand Loyalty, or ‘Casino’ Loyalty.
We will use economies of scale, which will be explained in the next section.
7. Economies of Scale:
With technical economies of scale, we are going to properly divide the labor (Division of Labor) within our number of workers. Also, we will calculate the maximum number of labor that we should have so as to achieve maximum profit.
With marketing economies of scale, we will buy drinks and food in bulk as well as signing contracts with our live bands for entertainment. Once enough money is earned, we will make a television advertisement so that we can increase the tourism in Venice and bring more customers to our casino.
We can seem to be more credit-worthy as we grow larger, and banks will be more willing to lend us funds rather than the younger infant casinos, thus we could use financial economies.
With administrative/managerial economies, we can employ more of the specialists to our side so that other companies may not be able to get them. This increases our efficiency and thus can increase productivity.
8. Non-Pricing Competition:
To decrease competition we will create a brand name for ourselves. With our new television advertisement we will be able to spread the name of our casino all over the country and maybe even the world. However, sadly gambling is banned from Italy except for a few other places other than Venice.
9. Price discrimination:
No, we may not be as there isn’t such a need. Price discrimination exists when a producer sells the exact same product to different consumers at different prices. In a casino, there is a likelihood of people heavily gambling, and making prices higher would only reduce their willingness to spend at our casino. We also decided that we would not compete with the other casinos with our low prices, therefore we would not want to use different prices unnecessarily.
1. What kind of services or goods does your firm offer. Describe your business.
Our service will be a casino in Venice, Italy called Sibola, after the city of gold, or El Dorado. We will provide beverages of all sorts including Original Aztec drinks, water will be provided free of charge. Legendary Aztec food will be sold as well, such as Gold Cheese and Gold painted Prata. Typical Casino games will be placed in the heart of the casino. These games are; Slots, Poker, Black Jack and Roulettes. Entertainment will be provided, Hard Rock style, meaning popular live bands and/or upcoming artists that we, the management, feel appropriate. There will be an indoor river flowing about the width of a meter throughout the casino as décor. Also, there will be super tight security throughout the casino because it is indeed, a casino.
For future Investments, we plan to extend our casino into a hotel- Moulin rouge versus Aztec Gold Style which will hopefully include a Waterfall and a Gondola, like in Venice.
2. Which market structure is your firm likely to form under? Why?
It will be an Oligopoly because it will be a rather large firm and there aren’t many casinos in Rome. This will give us an advantage in the market.
3. What Is allocative efficiency? This is in a perfect competition. It is when the resources are allocated so that there is a maximum amount of production and profit, or largest ‘net benefit’.
4. What is productive efficiency? This is when production of a product is at its lowest price.
5. Who are some of your competitors?
Name of these firms: Palazzo Vendranin- Calergi, Ca’Nog Hera, Casino de Venetia. These will be our main competitors in Venice as they are fellow Casinos.
6. Barriers to Entry:
We are going to try to monopolize the Casino market in Venice so that we will get all the gamblers and customers. We are going to do this by introducing a privilege card which offers private rooms and such. Also we will have things on offer, or good deals that can be only found in our casino. We will try to induce Brand Loyalty, or ‘Casino’ Loyalty.
We will use economies of scale, which will be explained in the next section.
7. Economies of Scale:
With technical economies of scale, we are going to properly divide the labor (Division of Labor) within our number of workers. Also, we will calculate the maximum number of labor that we should have so as to achieve maximum profit.
With marketing economies of scale, we will buy drinks and food in bulk as well as signing contracts with our live bands for entertainment. Once enough money is earned, we will make a television advertisement so that we can increase the tourism in Venice and bring more customers to our casino.
We can seem to be more credit-worthy as we grow larger, and banks will be more willing to lend us funds rather than the younger infant casinos, thus we could use financial economies.
With administrative/managerial economies, we can employ more of the specialists to our side so that other companies may not be able to get them. This increases our efficiency and thus can increase productivity.
8. Non-Pricing Competition:
To decrease competition we will create a brand name for ourselves. With our new television advertisement we will be able to spread the name of our casino all over the country and maybe even the world. However, sadly gambling is banned from Italy except for a few other places other than Venice.
9. Price discrimination:
No, we may not be as there isn’t such a need. Price discrimination exists when a producer sells the exact same product to different consumers at different prices. In a casino, there is a likelihood of people heavily gambling, and making prices higher would only reduce their willingness to spend at our casino. We also decided that we would not compete with the other casinos with our low prices, therefore we would not want to use different prices unnecessarily.
TEMAR
Monday, 27 April 09
At this time, due to the Economic recession, the number of students coming from overseas is falling as not many families can afford for studying in Singapore. Studying in Singapore includes costs such as accommodation costs, school fees, transport costs etc. As parents cannot afford to pay these costs, the demand for studying in Singapore will fall. After the Economy recovers, parents will be more willing to send their children overseas as Singapore is always a promising destination. At that time, there will be a lack of accommodation for international students, and the demand for studying in singapore would increase. Hence, we would like to set up a hostel to provide a ‘homely’ environment for them to stay in.
Since there are only five of us to set up a young firm, in most critique situation, we will have to use our own property (houses owned by our parents) to get the loan from the bank so that the bank will
have more confidence on us. In addition, it is better to borrow in the long term as our firm can benefit from the low interest rates. However,because the economy has just recovered and we are still young firm, our ability to survive in this industry is not high. Therefore, it
should be difficult for the banks to lend us large amount of money as
we do not have credit worthiness.
The second way to get capital for investment is forming a joint-stock firm with other large companies.
The share will be divided among five founders: Tracy, Esther, Munisha, Alisa, Rita and members from investor companies.
The name of our hostel is TEMAR. We offer accommodation for 300
students. We will provide a canteen with a variety of food according
to the culture. This service will not be inclusive of the
accommodation fees. Other than basic accommodation, we also provide
facilities such as sport complex, minimart and a common television.
The market structure that our business is likely to fall under is Oligopoly. Oligopoly is where a few firms dominate an industry. As far as we are concerned, there are about 3000 schools in Singapore but there are only 20 hostels available. That’s why we have decided to set up a hostel. We classify ourselves as Oligopoly because there is interdependence. As mentioned above, there are a few large firms dominating the industry. Hence, each firm needs to watch each other’s actions carefully. Also, comparing to the number of students coming to Singapore each year, the size of the firm relative to the market is large.
Allocative efficiency occurs where suppliers are producing the best
mix of goods and services required by consumers .On the other hand,
Productive efficiency occurs when producers are producing their
product at the lowest possible unit cost.
Some of our competitors are Oldham Hall, Evan, and other hostels of
the various schools of Singapore (http://www.contactsingaporecompanies.com/index.php?action=cat&catID=2359&name=Hostels). In order to compete with them and to
prevent other new competition, we would like to offer some services:
Sick bay and part-time nurses
Free transport to cinema ( bulk buying tickets for a particular movie monthly)
Free supper every consecutive week day
Field trip ( students will have opportunities to work with farmers
and experience a different lifestyle)
Rather than the methods we have stated above, we also can apply some other forms of barrier to entry according to different kinds of economies of scale.
First , there can be marketing economies of scale via international schools from which the students have demand for accommodation. Spreading leaflets and posters is also a good way to advertise about our hostel.
Secondly, bulk buying can help us to save a lot as when purchasing in a large amount, the average cost will be lower than buying individually. Food catering is a common way of buying large amounts of food, and this is a good example of bulk buying. Bulk buying, in simple terms, is buying a large amount of goods at one go. In this scenario, there can be bulk buying economies of scale. For example, we can cater in 1000 packets of milo drinks and 100 boxes of fried noodles to be sold during meal times at the canteen in the hostel. It sure saves cost to buy many boxes of food at one time, rather than buying one box at a time!
Last but not least, we can apply economies of specialization. The work will be divided among five of us and each of us will be responsible for one department such as facilities, labour, food, discipline, office. Here, we can see division of labour. Division of labour is breaking a production process down into small activities that workers can perform repeatedly and efficiently. As the work is divided, each and everyone of us takes on a specific job to do and do that same job again and again. Specialization is when workers focus on a specific type of work that they do. Here, we specialize in the work we do as we are only doing that particular job. This also makes production becomes more efficient.
Price discrimination exists when a producer sells the exact same product to different consumers at different prices. There is a number of ways to practice price discrimination. We would like to suggest the most applicable 3 ways. Firstly, we will set up founder’s privilege for the first 50 students to come. They will have special rights and advantages such as lower accommodation fees than usual as they were the first batch of students to stay at our hostel. Secondly, students are charged accordingly to their education levels, for instance, the juniors pay less than the seniors. Lastly, we can offer 5% discount to boarders who introduce their friends to stay in our hostel.
Rita
Esther
Munisha
Tracy
Alisa
HL Econs one(:
At this time, due to the Economic recession, the number of students coming from overseas is falling as not many families can afford for studying in Singapore. Studying in Singapore includes costs such as accommodation costs, school fees, transport costs etc. As parents cannot afford to pay these costs, the demand for studying in Singapore will fall. After the Economy recovers, parents will be more willing to send their children overseas as Singapore is always a promising destination. At that time, there will be a lack of accommodation for international students, and the demand for studying in singapore would increase. Hence, we would like to set up a hostel to provide a ‘homely’ environment for them to stay in.
Since there are only five of us to set up a young firm, in most critique situation, we will have to use our own property (houses owned by our parents) to get the loan from the bank so that the bank will
have more confidence on us. In addition, it is better to borrow in the long term as our firm can benefit from the low interest rates. However,because the economy has just recovered and we are still young firm, our ability to survive in this industry is not high. Therefore, it
should be difficult for the banks to lend us large amount of money as
we do not have credit worthiness.
The second way to get capital for investment is forming a joint-stock firm with other large companies.
The share will be divided among five founders: Tracy, Esther, Munisha, Alisa, Rita and members from investor companies.
The name of our hostel is TEMAR. We offer accommodation for 300
students. We will provide a canteen with a variety of food according
to the culture. This service will not be inclusive of the
accommodation fees. Other than basic accommodation, we also provide
facilities such as sport complex, minimart and a common television.
The market structure that our business is likely to fall under is Oligopoly. Oligopoly is where a few firms dominate an industry. As far as we are concerned, there are about 3000 schools in Singapore but there are only 20 hostels available. That’s why we have decided to set up a hostel. We classify ourselves as Oligopoly because there is interdependence. As mentioned above, there are a few large firms dominating the industry. Hence, each firm needs to watch each other’s actions carefully. Also, comparing to the number of students coming to Singapore each year, the size of the firm relative to the market is large.
Allocative efficiency occurs where suppliers are producing the best
mix of goods and services required by consumers .On the other hand,
Productive efficiency occurs when producers are producing their
product at the lowest possible unit cost.
Some of our competitors are Oldham Hall, Evan, and other hostels of
the various schools of Singapore (http://www.contactsingaporecompanies.com/index.php?action=cat&catID=2359&name=Hostels). In order to compete with them and to
prevent other new competition, we would like to offer some services:
Sick bay and part-time nurses
Free transport to cinema ( bulk buying tickets for a particular movie monthly)
Free supper every consecutive week day
Field trip ( students will have opportunities to work with farmers
and experience a different lifestyle)
Rather than the methods we have stated above, we also can apply some other forms of barrier to entry according to different kinds of economies of scale.
First , there can be marketing economies of scale via international schools from which the students have demand for accommodation. Spreading leaflets and posters is also a good way to advertise about our hostel.
Secondly, bulk buying can help us to save a lot as when purchasing in a large amount, the average cost will be lower than buying individually. Food catering is a common way of buying large amounts of food, and this is a good example of bulk buying. Bulk buying, in simple terms, is buying a large amount of goods at one go. In this scenario, there can be bulk buying economies of scale. For example, we can cater in 1000 packets of milo drinks and 100 boxes of fried noodles to be sold during meal times at the canteen in the hostel. It sure saves cost to buy many boxes of food at one time, rather than buying one box at a time!
Last but not least, we can apply economies of specialization. The work will be divided among five of us and each of us will be responsible for one department such as facilities, labour, food, discipline, office. Here, we can see division of labour. Division of labour is breaking a production process down into small activities that workers can perform repeatedly and efficiently. As the work is divided, each and everyone of us takes on a specific job to do and do that same job again and again. Specialization is when workers focus on a specific type of work that they do. Here, we specialize in the work we do as we are only doing that particular job. This also makes production becomes more efficient.
Price discrimination exists when a producer sells the exact same product to different consumers at different prices. There is a number of ways to practice price discrimination. We would like to suggest the most applicable 3 ways. Firstly, we will set up founder’s privilege for the first 50 students to come. They will have special rights and advantages such as lower accommodation fees than usual as they were the first batch of students to stay at our hostel. Secondly, students are charged accordingly to their education levels, for instance, the juniors pay less than the seniors. Lastly, we can offer 5% discount to boarders who introduce their friends to stay in our hostel.
Rita
Esther
Munisha
Tracy
Alisa
HL Econs one(:
Economics Start-Up Project By Jargalan Batsaikhan, Dunstan Ong, Nathanael Tan, Ian Erb
Industry Type: Domestic Services
Name of the company: Mega Amazing Indonesian Domestics (M.A.I.D)
Services: Maid Agency
Firm Description: M.A.I.D provides the most efficient domestic helpers available in today’s society. Our professional domestic assistants will be able to cater to your every need. Based on the principles of honesty, respect and loyalty, M.A.I.D strives to achieve a better world, today. M.A.I.D recruits young women from disadvantaged origins and trains them to become experts in the field of domestic assistance, by using our services, you give them a chance to a better life. Help us, help you.
What is allocative efficiency? It is the socially optimum level of output. Allocative efficiency takes place when the suppliers produce the optimum variety of goods and services demanded by the consumers.
What is productive efficiency? Productive efficiency is when the firms produces a product at the lowest possible cost and is when the output is at its most efficient level.
When there are barriers to entry, it is difficult for firms to enter or exit the industry. 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 to your firm, how do you go about doing it?
In order to maintain an economic advantage we plan on being entirely superior to competitive firms, by providing cheaper services, having more advertising and by expanding through acquisition of smaller firms in the same industry.
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?
By recruiting and training young women from disadvantaged backgrounds, we cut back on our production costs, thus benefiting from financial economies of scale.
What kind of price or non-price competition will your firm engage in?
Our firm will use non-price competition by becoming unrivaled in terms of quality, using our training services our domestic assistants will be far better equipped with the skills they need to become the ideal housekeeper. This gives us the competitive edge over other firms which do not have such comprehensive training programs.
Are you going to practice price discrimination to gain more revenue?
In the market of domestic assistance it would be impossible for us to take price discrimination into practice. As a result, we will have to rely on our strength in non-price competition.