MGTA01H3 Lecture Notes - Lecture 4: Perfect Competition, Variable Cost, Fixed Cost
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MGTA01H3 Full Course Notes
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Price: def: what the business will charge in exchange for its product. Pricing involves judgement and choice because business has two objectives: Business must make profit - large or small. The two things that determine the business" ability to set its price: the degree of competition the business" costs. Large number of seller, offering the same product. Buyers have good choice, seller has limited ability to set price and so charge what everyone else is charging pricing in an oligopoly market: One change in price will raise or lower the price of another business. Differentiation is there by form of branding, advertising and other forms of promotion. Most sellers are small and some are big. Big sellers use differentiation to differentiate their product charging a higher price. Pricing in a monopoly market: can set whatever price. Cost of sales/ cost of goods sold: def: the cost of the ingredients, parts, and, materials, that go directly into making a product.
