Question

1. Individual Problems 10-1 Use the table to indicate whether a high or low level of that category is associated with higher rivalry among competitors. Category Level of product differentiation High 0 Low 0 2. Relative to managers in more competitive industries, managers in more monopolistic industries are more likely to spend their time on (Pricing Strategies or reducing costs) 3. Suppose the elasticity of demand for your parking lot spaces, which are located in a downtown business district, is -1.8, and the price of parking is $11 per day. Additionally, suppose that your MC is zero, and your capacity has been 80% full at 9 AM each day over the last month. ind is Since demand is (Unit Elastic or Inelastic or Elastic), and the lot is below capacity, _ (Leaving the price Unchanged or increasing price or decreasing price)is the optimal pricing strategy.

Answer 1

(1) Low

The lower the product differentiation, the more homogeneous the product and therefore, the higher the substitutability, which increases competition and rivalry among firms.

(2) Pricing strategy

More competitive firms face similar prices, so lowering costs increases their profit. But monopolistic industries can set their own price and so, focuses on pricing strategy.

(3) Since demand is elastic, decreasing price is optimal strategy.