Group

WELCOME TO
OUR PRESENTATION
Case
1 NOW WE ARE WITH…

Shafiul Azam Shuvo

ID: 22-083
 Case-01

 Pricing Admission to A Museum

 Case Overview

• Major Art Museum

• Museum is running short of funds
• Consider changing the price of admission
• To increase total revenue
 Core Problem

 Whether increase the price of

admission or lower it!
 Three Step Solution Pack

Step 1: Measure Elasticity of Demand

Step 2: Identify the class of Elasticity
Step 3: Decide about Pricing Admission
 Decision Making
Criteria

% change in quantity demanded

Ed= % change in price
Decision Making
Criteria
 Ed>1: Elastic

 Ed<1: Inelastic

 Ed=1: Unit Elastic

 Decision Making
Criteria
Price
Increase/ Elastic Inelastic Unit Elastic
Decrease
Price TR TR TR
Increase

Price TR TR TR
Decrease
 Final
Decision
Elastic= Cut Down Price

Inelastic= Increase Price

Unit Elastic=Doesn’t Matter

Case
2 NOW WE ARE WITH…

Nousheen Nawar
ID: 22-086
 Case 2 Scenario

• Firm’s short run decision to shut down

• In a competitive market.
• Revenue from the few customers could
not possibly cover the cost of running.

Near-Empty Off-Season
Restaurant Miniature Golf
 Consideration
Price

Fixed costs
• Not relevant
Fixed
• Sunk costs in the Costs
short run

Price
Variable
Costs Quantity

-Variable Costs
• Relevant
• Include costs of
running
Quantity
 DECISION
Super Normal Profit Loss

MC

Price
Price

AC MC

AC

Loss MR, AR, D

MR, AR, D
Profit
Cost
Cost Total Total
Revenue Revenue

Quantity Quantity

Stay OPEN Stay CLOSE

When revenue>variable costs When revenue>variable costs
Case
3 NOW WE ARE WITH…

Sumaiya Siddique
ID: 22-122
Situation Analysis
Monopoly Drugs vs Generic Drugs

Situation 1
Government Grants Patent which Results in
Monopoly Drugs

Situation 2
Pricing Strategy During Monopoly Period

Situation 3
i. Pricing Strategy after Patent Period & Generic
Drugs
ii. Controversies about Product Differentiation
 Situation 1
Creation of Monopoly Drugs

1 2 3 4
Findings To
Resulted Encourage
Extensive in Further Results in
Research Done Developm Research Monopoly
by a Particular ent of Life- Governme Drugs
Firm Saving nt Grants
Drugs Patent

17
 Situation 2

Pricing Strategy During Monopoly Period

Price,
Cost,
Marginal
Monopolist’s Mission= Profit Revenue
Maximization
Profit is Maximized when; CS Deadweig
FOC; MR=MC P-Price ht Loss
SOC; P>ATC
PS
Excess Capacity= Deightweight
Loss MC-
Marginal
Cost/ ATC

Quantity
Q- MR-
D-Demand
Marginal
Quantity Curve
Revenue
 Situation 3
i. Pricing Strategy after Patent Period & Generic
Drugs

Price,
Cost,
Marginal
Revenue
To Enjoy the Super Natural Profit
More Firms Will Enter Into the
Industry
So, the firms will charge the
price where,
MC-
D=MC, P-Price Marginal
Cost/ ATC
&
Quantity
P=Market Equilibrium Q- D-Demand
QuantityCurve
 Situation 3
ii. Controversies about Product Differentiation

Price,
Cost,
Marginal
Revenue

Due to Brand Loyalty the

Former Monopolist Firm will
still Have an Opportunity to
Charge a Price above MC, P1-
To Enjoy the Super Natural Profit
thus Enjoying Economic Price
More Firms Will Enter Into the
Of the
Profit. MC-
former
IndustryP2- Marginal
Price Cost/ ATC
So, the firms
Of will charge the
others
price where, Quantity
Q1- Q2-
Quantity QuantityD-Demand
D=MC of of OthersCurve
Formers
Case
4 NOW WE ARE WITH…

Miskatul Al Arafat
ID: 22-149
OPEC & The World Oil Market
 Organization of Petroleum Overview

OPEC Overview

 Set up in 1960
 Principal Aim- 'coordination & unification of
petroleum policies of member countries ‘
 40% of the world's crude oil production
 EFFECTS of Cartelization

 Price being affected due to speculation

 1980- OPEC made a mistake by increasing oil prices
to $40 / barrel
 Reduction in demand hence reduction in prices
 Problem with cartel
 Maintaining the right price
 Allocate sales among OPEC countries
 Competitive Strategies OF OPEC

 During 1970
 Power of price setting shifted from MNC oil companies to
OPEC
 1975-1985
 Oil production increased from 48% to 71%
 OPEC price policy

 March 2000 –Set a Price Band mechanism in the

range of $22-$28 per barrel
 Jan 2005 – suspended price band mechanism
 Market was tight in its price band
 Unable to defend by cutting its production
Case
5 NOW WE ARE WITH…

Nishat Tasnim Haque

ID: 22-155
 Case
5
Advertising
for Eyeglasses
 Case
5
1972, Economist Lee Benham
two views of Advertising
Offering
Best
Different
prices
than
Less others More
Competitive Competitive

Less Elastic More Elastic

Demand Demand
Curve Curve
Case
5

$33
Banned
Advertising

1960 20%
Allowed
Advertising
$26
Case
5

Creates Monopoly for some well

S known companies

Ban on Initially Started companies cannot

W
Advertising reach to the customers

Product differentiation increases

O Of well-known companies
Case
5

O Competition Reduces

Less Elastic Demand Curve

Setting Higher Prices

 Case
5

Fosters Competition
T

Allowing
Advertiseme S Initially Started companies can reach to
the customers
nt

O Product differentiation increases

Case
5

S Well-known market and products

Elastic Demand Curve

Setting Lower Prices

Case
5

Advertising makes market

more competitive and
more elastic
 Thanks for
your patience