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Chapter 4: Q. 1 (page 90)

How do you suppose that when soft drink sellers introduced cans containing 7.5 ounces of soft drink to sell alongside traditional 12-ounce cans, they managed to offer the soft drinks in the smaller cans at prices that were several cents higher per ounce of soft drink?

Short Answer

Expert verified

Through non-price competition

Step by step solution

01

Step1. Given information

Soft drink sellers introduced cans containing sold 7.5 ounces of soft drink simultaneously with the traditional 12-ounce cans. They sold the drink at a cost/drink higher in the small cans than in big ones.

02

Step2. Explanation

This can be achieved through non-price competition. It is not necessary to compete on the basis of who-sells-what-at-lower-prices. Customers can also be attracted through brand building, marketing, attractive packaging, giving out offers, etc. All these strategies together comprise of the non-price competition, as in not reducing the prices to increase sales but offering more services than the competition.

All this, can lead to soft drink sellers managing to offer the soft drinks in the smaller cans at prices that were several cents higher per ounce of soft drink.

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Most popular questions from this chapter

In 2016,the government ofanation establisheda

price support for wheat.The government's sup

port price has been above the equilibrium price

each year since,and the government has pur

chased all wheat over and above the amounts that

consumers have bought at the support price.

Every year since 2016,there has been an increase

in the number of wheat producers in the market.

No other factors affecting the market for wheat

have changed.Predict what has happened every

year since 2016,to each of the following:

a.Amount of wheat supplied by wheat producers

b.Amount of wheat demanded by all wheat con

sumers

c.Amount of wheat purchased by the government

Consider the information in Problem 4-9 and your

answers to that question.Suppose that the market

clearing price of Pakistani wheat in the absence of

price supports is equal to$0.10 per kilogram.At

this price,the quantity of wheat demanded is 12

billion kilograms.Under the government wheat

price-support program,how much more is spent

each year on wheat harvested in Pakistan than oth

erwise would have been spent in an unregulated

market for Pakistani wheat?

Other things being equal, is the price of milk in Europe likely to rise or fall in response to the elimination of milk production quotas? Explain your answer.

There are simultaneous changes in the demand for and supply of tablet devices, with the consequences being an unambiguous decrease in the equilibrium quantity of these devices but no change in the market clearing price. What changes in the demand for and supply of tablet devices could have generated these outcomes? Explain.

Why do you think that economists seek to study prices measured in terms of dollars per unit as measured, say, by weight or by volume rather than by prices per package or per container? Explain your reasoning.
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