Question

In: Economics

Suppose you manage a local grocery store, and you learn that a very popular national grocery...

Suppose you manage a local grocery store, and you learn that a very popular national grocery chain is about to open a store just a few miles away. Use the model of monopolistic competition to analyze the impact of this new store on the quantity of output your store should produce (Q) and the price your store should charge (P). What will happen to your profits? Explain your reasoning in detail. How and why do profits change? What could you do to defend your market share against the new store? (200 WORDS)

Solutions

Expert Solution

Therefore it can be mentioned that in order to protect the market share from the competitors it is very important to differentiate your product and service level such as Anchorage new service techniques in terms of delivery and billing system and loyalty methods can also be created so that more and more customers start to kitchen to the store so that you can get yourself protected from the national store and run with the competition all in all


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