Answer to Question #127208 in Microeconomics for mimi

Question

Question 3
While charging a normal admission fee for adults most days of the week, local cinema offers special low price for ladies’ admission every Wednesday. Why do you suppose the cinema often price this way, offering lower fee on one day during the week? Why would they choose a day like Wednesday rather than Saturday?
(4 Marks)
Question 4
Choose any one brand and identify its market structure. Explain the characteristics of this brand to conform with the structure.

Answer 1

3a)During the midweek the demand for the cinema is low compared to weekends like Saturday. Therefore, the cinema offers low admission price for women because their turn up during the week days is relatively low as compared to the gentlemen. Besides, low admission prices offered to ladies is business technique for attracting more customers during the weekdays as well as during the weekends.

b)During the weekdays the general turn up for customers is low as compared to the weekends which has relatively high turn up. Therefore, they offer low admission charges on Wednesday to attract more customers that is ladies.

4a) Coca-Cola Company

Oligopoly market structure

b)Characteristics of Oligopoly market structure

Few sellers-Coca-Cola Company controls most sales in the beverage industry globally.

Barriers to entry-It is almost impossible for a new firm to enter into the oligopoly market. Pepsi for instance tried to enter into the market with the aim of competing with Coca-Cola but finally collapsed.

Interdependence- Most oligopoly firms depend on their rival firms in terms of pricing. For example, if one oligopoly firm adjust its prices, it has a direct impact to the rival firm. Therefore, the rival firm must respond to any changes to avoid any negative impacts that it might experience.