- •Economic environment. Economic goods and services.
- •Costs of production. Opportunity costs. Tradeoffs.
- •Utility and prices.
- •Income and spending
- •Recruitment. The letter of application. Cv.
- •Market Structures
- •Pricing policies.
- •Economic growth. Costs of economic growth.
- •The nation’s economy. Gnp. Economic indicators.
- •Money. Banking and monetary policy. Money: roles, forms, functions.
- •The supply of money.
- •The role of central banks and commercial banks.
- •Forms of money.
- •Types of bank accounts.
- •Making a personal budget.
- •The Value of a college education.
- •Comparing prices.
- •Finding a job.
- •The rights of a customer and the responsibilities of a supplier.
- •Costs of economic growth. Labour problems.
- •An annual report of the company.
- •Financing a loan.
Market Structures
For any given product that is produced, its production market falls into one of four categories:
pure (perfect) competition,
monopolistic competition,
oligopoly,
monopoly.
These categories are called the "market structures". The category that a product falls into depends on how many people are producing it.
In a purely competitive market, there are many buyers and sellers. It is easy for a new person to enter the market, and the products are all pretty much identical. Perfect competition happens when numerous small firms compete against each other. Firms in a competitive industry produce the socially optimal output level at the minimum possible cost per unit.
In monopolistic competition, an industry contains many competing firms, each of which has a similar but at least slightly different product. Each firm has a small amount of control over the price, and it is fairly easy for a new producer to enter the market. Examples of monopolistic competition are barber shops, restaurants, and book stores. There are many firms in these markets. Each one is different, and they compete with each other by emphasizing how their product or service is different from the others.
In an oligopoly, there are just a few large firms producing the product. There is limited entry into an oligopoly (in other words it is difficult for a new firm to enter into the market and be widely recognized and accepted), and oligopolies utilize non-price competition and product differentiation. An example of an oligopoly is the automobile industry; just a few large firms producing the products, such as Volkswagen.
In a pure monopoly, there is no competition at all, just one large firm making a given product. A monopoly can charge any price it wants for a product, since there is no other producer with a lower price that consumers can go to. Since monopolies hurt consumers by not providing people with any choice of where to go, the government often breaks up monopolies.
While most developed nations today could be classified as having mixed economies, they are often said to have market economies because they allow market forces to drive most of their activities, typically engaging in government intervention only to the extent that it is needed to provide stability.
Although the market economy is clearly the system of choice in today's global marketplace, there is significant debate regarding the amount of government intervention considered optimal for efficient economic operations.
Pricing policies.
Pricing Policy basically depends on price theory that is the corner stone of economic theory. Fixing prices are the most important aspect of managerial decision making because market price charged by the company affects the present and future production plans, pattern of distribution, nature of marketing etc.
The factors that the company must consider in determining pricing policy:
(1) Costs
In order to make a profit, a business should ensure that its products are priced above their total average cost. In the short-term, it may be acceptable to price below total cost if this price exceeds the marginal cost of production – so that the sale still produces a positive contribution to fixed costs.
(2) Competitors
If the business is a monopolist, then it can set any price. At the other extreme, if a firm operates under conditions of perfect competition, it has no choice and must accept the market price. The reality is usually somewhere in between. In such cases the chosen price needs to be very carefully considered relative to those of close competitors.
There are different types of pricing policies.
Strategic Pricing
You could use “charm pricing” (off-even pricing) that is using prices that are not round to draw attention to your product. For instance, you could price your product at $19.99 instead of $20. Customers will interpret the product as being in the $10-$19 range.
Discounting (loss-leader pricing)
Discounted pricing is a sure path to reduced profits, which is fine if you plan to sell in high quantity. However, pursuing this type of pricing strategy can really hurt your company’s image. Offering low prices or discounting your prices could relay to your customers that you lack confidence in your products - that you think your product is in decline or that you don’t believe that the price you set delivers a good value.