Question

In: Economics

Twin Donuts restaurant introduces a new promotional advertisement “Buy three donuts for $1.50; regularly costs $250.00...

Twin Donuts restaurant introduces a new promotional advertisement “Buy three donuts for $1.50; regularly costs $250.00 and get the four one free. This Ad will end will end May, 2018.

Explain what does each of the following situation best represents and then choose your best answer?

Producer-producer rivalry.

Consumer-consumer rivalry.

Producer-consumer rivalry.

Solutions

Expert Solution

Answer- Producer to peoducer rivalry tefers to a situation where the sellers are competing against all the sellers in the market to sell their respective products to the available number of customers. In this case the sellers employ many techniques to persuade the constomera that their product is the best and focus on saling as many prosucts and making relations with customers so that future sale and potential customers are there.

Consumer to consumer rivalry is a situation where the consumers are competing against each other to buy or hetbthe desired product or service. Since in any economy the resources are limited thus to fulfill the desires of each and every customer is not possible. So consumers compete against each other and bid for the goods that they want to purchase.

Producer to consumer Rivalry occurs when it creates a situation where the consumer wants to pay as low as possible and the seller wants to sell as high as possible to make greater profits. Here the buyer uses bargaining skills and other tactics to get the product or service at the desired price and the sellers try to persuade the buyers to buy at the peoce at which the sellers want to sell.

The above refered case is an example of Producer - Producer Rivalry. As one producer offers some schemes on it’s menu sonthat more customers can get attracted to it. Here one producer is trying to attract as many buyers as possible from the limited pool of buyers so that the profit is maximised.


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