Quiz 13: Strategic Decision Making in Oligopoly Markets


As we all know MC Donald is known for their hygienic burgers, which is their core competencies. If they want to attract customers by reducing the price they have to do it strategically so that it doesn't harm their market share. Here in question, they are offering a reduction of 75% in price on burgers if consumer also buys French fries and a soft drink along. From economic point of view this strategy is not a good strategy, because if consumer doesn't want to have the extra items they are providing along, and are being charged unnecessarily for that, then in this case they definitely will not buy. Even if they buy that too, no doubt the consumer would get less to pay on burger, but for attached foods they would end up paying more. This is the reason consumers didn't turn up with the scheme. So they have to formulate strategy in such way so that it benefit both ways and also it's should be win-win situations on all side.

Set P = c and solve for Q c to get Q c = ( c - a )/ b. Set MR = c to get Q m img Since c a : img And, substituting Q c , Q m , and Q Duopoly into the inverse demand function provides the following results: img Using the restriction c a , it is straightforward to show that img

Negative campaigning is the vilification of opponent among mass in order to incite them to do untoward things and get them disqualified or by less, promoting things that has the negatively impact on the minds of voters. In this circumstances suppose there are two political parties, each one is contesting to win over the public. If there are two political parties fighting for a seat, and if party A wants to grab power by attacking the party B, and if the party B does not react and took a positive stance, then it will incur a heavy loss. No doubt rational requires remaining positive in approach, but if the opponent is always in constant bricking in order to defeat its opponent then it's quite challenging for the party to hold on. Positive approach sometime signals the general masses that what is being circulated was actually true, As a result, party has to suffer losses. Party B decision is strategically correct but politically incorrect. So they have to plan and formulate strategies in such a manner so that opponent attack doesn't stand any chance of influence and party doesn't get affected. The dilemma here for party B is whether to answer the attack or not, if they take positive approach, voters will come out to vote, but then wrong information will be passed among the mass. If they defend themselves vocally like that of attacking party, they will able to restrict the wrong information to bypass but voters will be dejected and will not vote.