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Your marketing team informs you they expect the number of buyers in a market you service to increase. In addition, your engineering team informs you of a technological advancement that will lower your marginal costs. Assuming you are setting a single price in the market and you have market power, where should you expend your strategic resources? a. Operations. Specifically, you know your output will increase but you're not as certain about your pricing. b. Marketing. Specifically, you know you are going to charge a higher price, which will cause you to have fewer customers in the future. Thus, you'll need to make sure to have a close relationship to the customers you do have. c. Advertising. In order to offset a higher price, you're going to have to increase your advertising to ensure you have as many customers as you have now. d. None of the above options are consistent with single - pricing with market power.

Your marketing team informs you they expect the number of buyers in a market you service to increase. In addition, your engineering team informs you of a technological advancement that will lower your marginal costs. Assuming you are setting a single price in the market and you have market power, where should you expend your strategic resources? a. Operations. Specifically, you know your output will increase but you're not as certain about your pricing. b. Marketing. Specifically, you know you are going to charge a higher price, which will cause you to have fewer customers in the future. Thus, you'll need to make sure to have a close relationship to the customers you do have. c. Advertising. In order to offset a higher price, you're going to have to increase your advertising to ensure you have as many customers as you have now. d. None of the above options are consistent with single - pricing with market power.

Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter4: Extent (how Much) Decisions
Section: Chapter Questions
Problem 4.1IP
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Your marketing team informs you they expect the number of buyers in a market you service to increase. In addition, your engineering team informs you of a technological advancement that will lower your marginal costs. Assuming you are setting a single price in the market and you have market power, where should you expend your strategic resources? a. Operations. Specifically, you know your output will increase but you're not as certain about your pricing. b. Marketing. Specifically, you know you are going to charge a higher price, which will cause you to have fewer customers in the future. Thus, you'll need to make sure to have a close relationship to the customers you do have. c. Advertising. In order to offset a higher price, you're going to have to increase your advertising to ensure you have as many customers as you have now. d. None of the above options are consistent with single - pricing with market power.
Transcribed Image Text:Your marketing team informs you they expect the number of buyers in a market you service to increase. In addition, your engineering team informs you of a technological advancement that will lower your marginal costs. Assuming you are setting a single price in the market and you have market power, where should you expend your strategic resources? a. Operations. Specifically, you know your output will increase but you're not as certain about your pricing. b. Marketing. Specifically, you know you are going to charge a higher price, which will cause you to have fewer customers in the future. Thus, you'll need to make sure to have a close relationship to the customers you do have. c. Advertising. In order to offset a higher price, you're going to have to increase your advertising to ensure you have as many customers as you have now. d. None of the above options are consistent with single - pricing with market power.
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