4 Types of Role Market Players

1. Firms that serve small segments not being served by larger firms are known as ______________.

a) market followers
b) market nichers
c) adapters
d) market leaders

2. Microsoft is traditionally known as a _____________.

a) market nicher
b) adapter
c) market follower
d) market leader

3. A firm that is willing to maintain its market share will not rock the boat as ________.
a) market challenger
b) market niche
c) market follower
d) market leader

4. The firm with the largest market share in the relevant product market is called the _____.
a) market follower
b) market leader
c) market challenger
d) market niche
e) market king

5. Considering competitive positions, the company which serves small customer segments that remain
ignored by other companies in industry is classified as_______.

a) market follower
b) market niche
c) market challenger
d) market leader
6. To stay as a market leader, it is important to--------------

a) Find innovative ways to expand market share

b) Protect current market share through offensive and defensive actions
c) Increase market share even if market size don't changes
d) All of the above

7. Considering competitive positions, the firm other than market leader who is fighting hard in its
industry to increase market share is classified as

a) market follower
b) market niche
c) market challenger
d) market leader
4 Types of Role Market Players

8. If a firm's marginal revenue is greater than its marginal cost, then the firm should
a) increase output to increase profit.
b) decrease output to increase profit.
c) keep output the same.
d) collect additional information before taking any action.
9. Revenue is the income generated from the sale of

a) goods and services in a market

b) goods and services within an industry

c) None of the above

d) goods from the least cost method of production

10. When demand is price elastic, a reduction in price leads to

a) increase in revenue

b) increase in revenue initially, and a subsequent fall in the long run

c) reduction in total revenue

d) exit from the market

Write at least 5 examples of Market Leader, Market Challenger, Market Follower, and Market
Nicher.

Market Leader
1.
2.
3.
4.
5.

Market Challenger
1.
2.
3.
4.
5.

Market Follower
1.
2.
3.
4.
4 Types of Role Market Players

5.

Market Nicher
1.
2.
3.
4.
5.

What is Marginal Cost

Marginal cost refers to the additional cost to produce each additional unit.
Marginal cost comes from the cost of production.

Marginal costs are important in economics as they help businesses maximise

profits. When marginal costs equal marginal revenue, we have what is known as
‘profit maximisation’.

Marginal Cost Formula

Marginal cost is calculated by dividing the change in total cost by the change in
quantity.

Example

John Monroe owns a privately owned business called Monroes Motorbikes. In his
first year of business, he produces and sells 10 motorbikes for $100,000, which
cost him $50,000 to make. In his second year, he goes on to produce and sell 15
motorbikes for $150,000, which cost $75,000 to make.

First, we work out the change in the total cost. In this case, there was an increase
from $50,000 to $75,000 – which works out as an increase of $25,000. Then we
calculate the change in quantity which increases from 10 to 15; an increase of 5.
We then divide the change in the total price ($25,000) by the change in quantity
(5), which equals a marginal cost of $5,000 per motorbike.

Marginal revenue and marginal cost

4 Types of Role Market Players

Marginal revenue refers to the money a company makes from each additional sale, while
marginal cost is the amount it costs the company to produce extra units. When marginal revenue
is higher than a firm's marginal cost, then it is making money.

When marginal costs equal marginal revenue, then the firm enjoys profit maximization. 
How to calculate marginal revenue
Marginal revenue equals the sale price of an additional item sold. To calculate MR, a company
divides the change in its total revenue by that of its total output quantity.

Below is the marginal revenue formula:

Marginal Revenue = Change in Revenue / Change in Quantity

Example one: Say a company increases its production of product X by 100 units and receives
$200 in revenue. Marginal revenue will be:
$200 (change in revenue)/ 100 units (change in quantity) = $2 (marginal revenue)