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Vertical product differentiation can be measured objectively by a consumer. For example, when comparing two similar products, the quality and price can clearly be identified and ranked by the customer. If both A and B products have the same price to the consumer, then the market share for each one will be positive, according to the Hotelling ...
An automobile engine is an example of an intermediate good, and is used in the production of the final good, the assembled automobile.. Intermediate goods, producer goods or semi-finished products are goods, such as partly finished goods, used as inputs in the production of other goods including final goods. [1]
Hence, the basic example works as an illustrative “scale model” of production without any features of a real measuring situation being lost. In practice, there may be hundreds of products and inputs but the logic of measuring does not differ from that presented in the basic example.
Example of three food carts extending Hotelling's Law, and two carts on a circular path In the case of three pushcarts an unstable equilibrium is reached. Imagine carts A and B are adjacent and each have access to half the potential customers (A’s to the left, B’s to the right).
For example, textiles or transistors can be used to make some further goods. Commercial goods are construed as tangible products that are manufactured and then made available for supply to be used in an industry of commerce. Commercial goods could be tractors, commercial vehicles, mobile structures, airplanes, and even roofing materials.
Goods can be returned while a service, once delivered cannot. [4] Goods are not always tangible and may be virtual e.g. a book may be paper or electronic. Marketing theory makes use of the service-goods continuum as an important concept [5] which "enables marketers to see the relative goods/services composition of total products". [6]
The simple commodity producers could aim just to trade their products or services to obtain other products with an equivalent value, or they could, in favourable circumstances, aim to realise a profit. They could sell their products or services to the final consumer, or to an intermediary such as a merchant.
The price is set at the market level through the interaction of supply and demand. The firms can sell as much of the product as they want at the set price since they are price-takers. There are several examples of how factor markets can affect economic outcomes. One example is the impact of labor market regulations on unemployment rates.