The reward/need satisfaction theory of relationship proposed by Byrne & Clore (1970) asserts that if a relationship is seen to offer the prospect of reward (for either party), it is more likely to form – if there is little or no perceived reward, the relationship does not form. Their model is based on the behaviourist principles of operant and classical conditioning. According to the former, behaviour that results in a beneficial outcome makes repetition of this behaviour more likely, whereas if the outcome is undesirable, the behaviour is less likely to be repeated or continued. A relationship that brings perceived advantages is a case of positive reinforcement but the relationship can also be characterised by negative reinforcement if the
If the marginal revenue is greater than marginal cost this would be when a profit maximizing firm would need to increase production until marginal revenue is equal to marginal cost. However, if the opposite situation exist were the firm finds that the marginal revenue
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a bolt needed has increase in price for smaller qty needed to complete total production run. 1. Explain its relationship with total cost. The relationship between marginal cost and total cost is that both are the total cost in producing a unit of goods. C. Define profit.
This occurs with first degree price discrimination as consumers must pay the maximum that they were willing/able to pay, which may lower their real income. Moreover, the consumer surplus that they would have obtained at a lower price is transferred to the producers meaning that the producers gain at the expense of the consumer, which is definitely undesirable. On the other hand, although the consumer may be disadvantaged, the producer is likely to benefit from the price discrimination in this way, especially if the firm is a dominant or monopoly firm, as it has the ability to set prices higher than they would be in a perfect competition model. Higher prices means that the firm’s revenue will increase, and it is likely that their profit will too, as monopolies are able to extract consumer surplus and transfer it into supernormal profits. Consequently, these profits can be reinvested into the
et powerECO204: Homework Assignment 3 1. True, False, Uncertain a. A firm that enjoys economic rents earns higher economic profits than other firms without the economic rents. b. Relative to the perfectly competitive equilibrium, the equilibrium outcome for a market dominated by a monopsonist will be higher prices and lower levels of good demanded.
Section one was about Highly Competitive Markets. There are two types of highly competitive markets: those with perfect competition and those with monopolistic competition. I learned that perfect competition equals more competition and pure monopoly equals less competition. The only difference with the two is that sellers offer different, rather than identical, products. Section two was about Imperfectly Competitive Markets.
The strongest competitive advantage is a strategy that that cannot be imitated by other companies. Competitive advantage can be also viewed as any activity that creates superior value above its rivals. A company wants the gap between perceived value and cost of the product to be greater than the competition. Michael Porter defines three generic strategies that firm's may use to gain competitive advantage: cost leadership, differentiation, and focus. A firm utilizing a cost leadership strategy seeks to be the low-cost producer relative to its competitors.
Skimming Pricing – The business initially starts with a higher price and eventually decreases to a lower price. Premium Pricing – The price is set high to shadow the exclusiveness of the product. The pricing strategy I will be using
An example of this would be the belief that by working harder or more efficiently, that you would end up producing more. It is the belief that your attempts to take action will be successful. Valance The second factor is Valence. Valance basically refers to how much you value the ultimate outcome that may result from your action. For example, if you highly value money, then the more you get paid for taking a certain action, the higher your motivation.