Microeconomic Questions - Assignment Example

Unfortunately, since the heavy commercialization of Pepsi and Coca Cola in the 1980s, RC Cola has struggled to keep up with bringing its name forth to the general public. Presumably, RC Cola did not see the merit of wasting so much revenue on advertisements; its owners now of course, see the errors of their ways. RC cola must resort to advertising rather an lowering its prices because both Pepsi and Coca Cola have substantially-prominent name-recognition. Rather than using penetration pricing strategy (a strategy that involves undercutting the prices of competitors), RC Cola must get name recognition out there to compete on the same level as Pepsi and Coca Cola.

Monopolistic Market Structures have a unique set of stratagems for optimal pricing and optimal profits. In a monopolistic market structure, the competition is between firms selling similar but not entirely-substitutable products. It is open to all firms that want to earn profits. The firms within a monopolistic market structure are profit maximizers and all of the firms have some market power. Saudi Arabia has strong government controls over major economic activities. It possesses one-fourth of the worlds proven petroleum reserves, ranks as the largest exporter of petroleum, and plays a leading role in OPEC.

With its multiple oil reserves, the country still maintains low production costs and therefore will most likely remain the number one exporter of petroleum for a long time to come. The oil reserves also help in lowering the unemployment rate which generally hovers around 15%. The petroleum sector accounts for roughly 75% of revenues and 45% of GDP. About 40% of GDP comes from the private sector.1 By producing a consistently high amount of oil daily, the prices per barrel have continued to rise, as an increasing demand meets the expected quota.

Other countries have ceased exporting their own oil because of the adequate amount produced by other leading contributors of the world’s