MGTA01H3 Lecture Notes - Lecture 4: Monopolistic Competition, Fixed Cost, Variable Cost

• School: UTSC
• Department: Management (MGT)
• Course: MGTA01H3
• Professor: Professor Boivard

Document Summary

There are two fundamental purposes when a setting a price: the degree of competition, the business costs. Each competition has its own uniqueness when setting a price towards the consumers. In some cases, individual businesses must charge what everyone else charges, therefore, this is called the market. Market price at any particular time the prevailing price to which buyers and sellers agree. We must buy on the seller"s terms, or decide to do without. To set a price a business must understand its costs. Every time a buyer purchases a product, the seller must give up something in return. A product has two types of costs: the cost that goes directly into making the product, the cost of running the organization that makes the product. When considering the cost that goes directly into making the product, it is known by a variety of names, one of them is called cost of sales.