Bridget’s Widgets and Wodgets MOD8 FINAL

docx

School

Colorado State University, Global Campus *

*We aren’t endorsed by this school

Course

202

Subject

Economics

Date

Feb 20, 2024

Type

docx

Pages

Uploaded by ColonelRam4020

1 Bridget’s Widgets and Wodgets Terry McKnight Colorado State University Global ECN 210-1 Dr. Gregory Evans February 12th, 2024

2 Bridget’s Widgets and Wodgets Because the business world is constantly changing, companies use various methods to talk to customers and meet their wants. Companies can charge different prices based on specific information about those customers. This is called price discrimination. Still, because rules are changing, there are more and more calls for limits on price discrimination to keep people safe from bad things that could happen. There are a lot of confusing links between laws that say you can't charge different prices and how those laws affect customers. We will look into how these rules affect the market, how easy it is for customers to get their favorite goods, and how they cause results that were not meant to happen. By breaking this problem down into its many parts, our study hopes to add valuable new knowledge to the discussions going on right now about economic policy and the health of consumers. We will also talk about how tariffs and subsidies affect market dynamics, especially when it comes to foreign trade, and how they interact with rules against price discrimination to affect consumer choices and market outcomes. Charges for the same product that vary according to a customer's purchasing patterns or demographics are known as price discrimination. Regulations against price discrimination, if they are implemented, may restrict businesses' capacity to determine prices using these criteria, impeding their strategic pricing approach to cater to a wide range of customer needs. This restriction on pricing flexibility may limit the availability of targeted prices and promotions by making it difficult for businesses to adjust prices to suit certain market segments. For example, in order for businesses to efficiently meet customer requests, strategic pricing that is driven by purchasing behaviors and demographics is essential.

3 Regulations that limit their capacity to alter prices in response to specific customer characteristics, however, may limit their pricing approaches. However, demographics and purchasing patterns have a big influence on product prices. Thus, businesses can price their products differently to target different customer categories and increase income. Businesses that carefully modify their prices to accommodate a range of consumer tastes and budgets can maximize their income streams and boost overall profitability. Companies can charge higher rates to segments willing to pay more thanks to this focused pricing strategy, which improves their financial success ( Marshall, G. 2020). Laws against price discrimination may have unforeseen consequences, such as restricting businesses' capacity to target markets, lowering their discounts, and raising the cost of goods like Bridget's Widgets and Widgets beyond the reach of particular consumer demographics. Because of limited pricing and discounting options, these laws may make it harder for some groups of people to get the goods they need, which could make accessibility problems worse. Laws prohibiting price discrimination, for example, may make it easier for companies to set targeted prices for a particular clientele. It may be difficult to guarantee that items are priced suitably for different market segments due to the rigidity of pricing methods (Bergemann et al., 2015). Further limiting consumer choice by limiting access to various pricing options are restrictions on price discrimination, which may also limit the availability of discounts. This could make Bridget's Widgets and Wodgets less accessible to some consumers, decreasing market accessibility and consumer welfare. Furthermore, by making it more difficult to set targeted rates and give discounts, price discrimination laws may prevent enterprises from becoming too costly for some clients. Businesses may find it difficult to successfully adjust their pricing to different consumer

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

4 segments if their pricing methods are rigid (Bergemann et al., 2015). As a result, it can become more difficult to offer promotions or discounts depending on the client's traits. This restriction on targeted pricing and discounting strategies might reduce consumer choice and worsen affordability issues for specific clientele. In the end, price discrimination regulations may unintentionally make it more difficult for companies to modify their pricing strategies to accommodate their clientele's wide range of demands and preferences, which could harm consumer welfare and market accessibility ( Qihong & Serfes, 2005) . Cost Analysis for Widgets and Wodgets moving automated. To determine the maximum Bridget would be willing to pay for the machinery, we can use the present value of future cash flows. In this case, Bridget's additional income of $10,000 per year for ten years represents a stream of future cash flows. Ref. Chapter 14 It is recommended that Bridget’s firm should not pay more than $73,601. Given that Bridget's firm can purchase the machine for $73k, Automation would increase her production and make her business more efficient. This would allow her to produce more at a lower operating cost, increasing revenue and overall earnings. PV=$10,000. X 1-(1+0.06) ^-10/0.006. 1-(1+0.06) ^-10/0.006. = 0.441606 0.441606/0.06= 7.3601 10,000 x 7.3601 = $73,601 PV = Present Value, PMT = Payment per period ($10,000) r = Interest rate per period (6% or 0.06), n = Number of periods (10 years) PV= PMT x 1-(1+r) ^-n /r PV=$10,000. X 1-(1+0.06) ^-10/0.006.

5 Widgets and Wodgets expand in Canada. The Canadian government may aim to safeguard Tim Tam workers, but government subsidies risk worsening economic challenges. Distorting markets will hinder the economic process. Providing subsidies will embellish earnings and give false information, fostering inefficiencies, creating dependency, straining public finances, and potentially inviting retaliatory measures in international trade; these subsidies could ultimately cause more harm than good to the Canadian economy. Additionally, providing subsidies would hinder growth in the long term because there wouldn’t be a need to innovate and improve out of the risk of losing government assistance. Canada and Tariffs There are different reasons why some Canadians might want to put taxes on Bridget's business. First and foremost, people might worry about keeping domestic businesses, like those that provide similar services or products, safe from competition from other countries. Mainly to keep jobs in the home country. Foreign companies often pull jobs away from the host countries, consequently impacting the local economy and potentially lowering GDP. Imposing taxes and other tariffs on foreign companies helps keep domestic jobs and prevents companies from expanding in foreign markets. Protectionism, on the other hand, is based on some false ideas. To begin, tariffs would make Bridget's products more expensive for people who want to buy them, hurting their general well-being and purchasing power (Team, 2023). In the car business, this happens all the time.

6 Second, tariffs can stop local industries from competing, stopping the efficiency and productivity gains usually when companies compete in a global market; third, Bridget's home country might return the favor, hurting Canadian exports and worsening trade tensions. The trade embargo on China's auto industry is an excellent example of America banning Chinese vehicles in the US. Lastly, tariffs keep resources from going to more efficient and innovative parts of the economy because they protect local industries that could be more competitive (Kim, lee al. 2022). This slows down economic growth and prosperity overall. Conclusion Due to the fluctuating nature of the business world, businesses must utilize a variety of strategies to interact with customers and satisfy their requirements. One of these strategies is price discrimination. On the other hand, in the face of shifting rules, there has been a growing desire for restrictions on price discrimination in order to reduce the likelihood of adverse effects. The purpose of our research was to investigate the complex relationships that exist between laws that ban price discrimination and the impact that these rules have on the dynamics of the market, the access that consumers have to goods, and the unintended consequences that result from these regulations. Through the process of dissecting this complexity, our goal was to make a significant contribution to the ongoing conversations that are taking place on economic policy and the welfare of consumers. To shed light on how these elements jointly influence consumer choices and market outcomes, we also investigated the interplay between tariffs, subsidies, and price discrimination restrictions, particularly in international commerce. This was done to shed light on how these factors interact. To successfully navigate the complexities of price discrimination legislation and its broader consequences for the economy and consumer welfare,

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

7 it was evident that it is vital to strike a balance between the protection of consumers and the efficiency of the economy. As decision-makers continue to traverse these obstacles, our research highlights the significance of taking comprehensive and nuanced approaches to address the myriad of concerns that are now happening.

8 References Bergemann, D., Brooks, B., & Morris, S. (2015). The Limits of Price Discrimination †. American Economic Review, 105(3), 921–957. https://doi.org/10.1257/aer.20130848 Gwartney, J., Stroup, R., Sobel, R., & Macpherson, D. (2020). Microeconomics: Private & public choice (17th ed.). Cengage Learning. Kim, S.-L., & Lee, S.-H. (2022). Foreign Eco-Technology Licensing Strategy and the Coordination of Import Tariff and Emission Tax Policies. International Economic Journal, 36(4), 510–529. https://doi.org/10.1080/10168737.2022.2142644 Marshall, G. (2020). Search and Wholesale Price Discrimination. RAND Journal of Economics (Wiley-Blackwell), 51(2), 346–374. https://doi.org/10.1111/1756-2171.12317 Team, C. (2023, October 16). Protectionism. Corporate Finance Institute. https://corporatefinanceinstitute.com/resources/economics/protectionism/ Qihong Liu, & Serfes, K. (2005). Imperfect price discrimination, market structure, and efficiency. Canadian Journal of Economics, 38(4), 1191–1203. https://doi.org/10.1111/j.0008- 4085.2005.00321.x Wang, X., & Zhang, L. (2022). Monopolistic third-degree price discrimination, welfare, and vertical market structure Links to an external site.. Review of Economic Design , 26(1), 75– 86.

Related Documents

Phase 5 Statistics High School Dropout Rates per State Final Draft.docx

ec140 final cheat (1).pdf

Curled Metal Inc.docx

Final Exam - CorporateValuation.docx

Chpt3Objective2.docx

The Market for Gasoline CT2 .docx

Yang.docx

Take-home exam_final Dec22_.docx

ACC 1 D9.docx

Assignment 14.docx

ACC Week 11 Assignment.docx

Week 3 Questions.docx

Recommended textbooks for you

Microeconomics: Private and Public Choice (MindTa...

Economics

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:Cengage Learning

Economics: Private and Public Choice (MindTap Cou...

Economics

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:Cengage Learning

Economics Today and Tomorrow, Student Edition

Economics

ISBN:9780078747663

Author:McGraw-Hill

Publisher:Glencoe/McGraw-Hill School Pub Co

Microeconomics: Principles & Policy

Economics

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:Cengage Learning

Exploring Economics

Economics

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:SAGE Publications, Inc

Managerial Economics: A Problem Solving Approach

Economics

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Cengage Learning

SEE MORE TEXTBOOKS

Recommended textbooks for you

Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics Today and Tomorrow, Student Edition
Economics
ISBN:9780078747663
Author:McGraw-Hill
Publisher:Glencoe/McGraw-Hill School Pub Co
Microeconomics: Principles & Policy
Economics
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning