explain why you will find prices that don't change for candy bars and why the price...

explain why you will find prices that don't change for candy bars and why the price is the same for Nestle and Hershey candy bars.

Solutions

Expert Solution

we can estimate the concept by the consumer demand theory.

candy bars are not the essential goods for human beings without which humans can't survive.moreover several substitutes and competitors are existing in the market to make the price change more tough.

now suppose firm x is producing and supplying candies in the market at $1 and same is being done by firm A,B,C,D at the same price.this means if the price is a little bit increased by the firm X (assuming everything remaining same) then the consumer will shift to the available option A,B,C,D. price of the candies are perfectly elastic that's why the price of candy doesn't change.

nestle and Hershey acquires major stake in market share for candies in the market. therefore there is always a cut-throat competition between them and they can't change the price and ultimately have to settle down at a determined price and the companies share can be maximize by the quality and services provided by the respective companies.

Rahul Sunny answered 9 months ago

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