The economic principle of substitution says that when there are two houses in the same neighborhood with the same size, appeal, and utility, the lower-priced one will tend to sell first.
<h3>The economic principle of substitution</h3>
- According to the principle of substitution, the cost of purchasing a substitute that is just as desired tends to establish the upper limit of value, assuming no inopportune delays.
- A shrewd investor would not spend more on an asset that generates income than it would cost to construct or buy an asset of a similar nature.
- According to this theory, the cost of acquiring a comparable substitute property with the same use, design, and revenue determine the maximum value of a property in most cases.
- For instance, why would somebody pay $1,000,000 for a home when they could pay $750,000 for a different but as appealing home in the same neighborhood?
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Answer:
YES - When marginal cost (MC) of production is increasing, the average variable cost (AVC) is increasing.
Explanation:
Marginal cost (MC) is the cost of producing an extra unit of output while Average variable cost (AVC) is the cost per unit of output produced.
When MC is below AVC, MC pulls the average down. This means that when MC is falling, AVC is falling
When MC is above AVC, MC is pushing the average up; therefore when MC is rising, AVC is rising.
The conclusion is that MC and AVC have a direct relationship and a rise in one will cause a rise in the other
, therefore when the marginal cost (MC) of production is increasing, the average variable cost (AVC) is increasing.
Answer: Positioning strategy
Explanation: In simple words it refers to a marketing strategy under which an organisation tries to spotlight specific areas of operations and qualities in the eyes of customers that they have better in comparison to their competitors.
In the given case, The food brewery is offering its product in a different way than the other participants and is trying their best to highlight that quality.
Thus, we can conclude that they are using positioning strategy.
Answer:
Explanation: A. Shadow price has not changed because Shadow price show value of a commodity without considering final cost.
B. Change in value 180 - 150/180 X 100 = 16.7
C. The optimal solution didn't change because the product price went from it highest profit 180 to it's least cost 150
The CEO was most likely referring to the following efforts : <u>d) a distribution center established in London to preempt the growth of a British car manufacturer</u>.
<u>Explanation</u>:
The company establishing its trade and investment activities across the national borders is known as international business.
The following are some of the factors of production:
i) Manufacturing infrastructure
ii) Technology
iii) Managerial talent
It is important for a company to take more effort and establish its distribution center overseas to confront the international competitors. In the above scenario, the CEO decided to establish his distribution center in London to block the growth of a British car manufacturer.
