Question

1. Regarding demand, how responsive are buyers to price changes in the market, and how elastic or inelastic is the demand for the products involved in a car business? Are there different groups of customers with differing demand elasticities? Is the firm able to use price discrimination?

2. Consider the car business What is the nature of competition in the market you have chosen? Describe where your firm fits into the range of market structures and why? What barriers to entry exist? What types of pressures do the firms involved face? Is there price pressure? Is regulation an issue?

Answer 1

If the demand is highly elastic then the consumer is more concerned about the price of the commodity because in this case, the consumer has many choices to purchase the commodity from the available substitutes, therefore, the elasticity of demand plays an important role in the decision of the customer to purchase the commodity at a particular price.
In the car business, the last city and in the last year is totally dependent on the trend and the features of the car.
Yes there are different groups of customers in the market and they are demanding according to the elasticity is generally the loo Price care as elastic demand means the customer or concern about the quality features in a reasonable price but when we talk about the luxury cars then the elasticity does not play an important role because a customer who is able to spend lots of money then the person can easily make a choice of purchase which car.
In the car market firms are generally using the price discrimination policies to increase the sale of the car.
2. In the car market, the nature of competition is generally oligopolistic because the investment level is very high and there are only a few firms who are the real players in the market.
In the car market, any new entry forms have to struggle hard to maintain an existence position in the market because it is very important to give quality features above then the existing carmakers.
There are certain barriers existing in the market like to clear all the formalities related to the installation of the setups and to go for the safety checks.
Initially, the types of pressure the firms involved are to cover up the variable cost and to increase the scene by capturing the market share.
Yes, regulation is an issue in the market so to remove the regulation and to maintain a sale up to a certain level it is important to work according to the assigned guidelines.