E-Commerce Methods of Amazon Essay Example | Topics and Well Written Essays - 250 words - 12

E-Commerce Methods of Amazon - Essay Example Amazon is able to lower its costs because it can offer customers lower prices than competitors. Lower production costs result in savings for customers because Amazon is able to pass those on.  Despite selling products for very little profit, Amazon is able to gain traction in the market simply because of the sheer volume of orders that it processes every day. Because Amazon focused on selling its products online from the very beginning, it was able to become well-known as an online goods store.  With Internet purchases increasing year on year, Amazon is well-placed to dominate the market for years to come. New market entrants are simply unable to compete with the purchasing power that Amazon has through its vast number of customers. The disadvantage to Amazon only selling through the Internet is that if the Internet is affected in any way over the next few years, the business will feel the effects of that. This is why Amazon should consider diversifying its business model so that risk is lessened.

Microeconomics Assignment Example | Topics and Well Written Essays - 2000 words

Microeconomics - Assignment Example 1b) Marginal rate of substitution of food for water is the quantity of water a consumer is willing to give up to have one additional quantity of food, keeping the level of utility unchanged. MRSw,f = MUw/MUf where MUw is marginal utility of water and MUf is marginal utility of food. The value of MUw when W=1 is 4 and value of MUf is 1 as derived from the utility function. Therefore MRSw,f = 4 which is a constant. Therefore the consumer is willing to give up 4 quantity of water to have one additional quantity of food. 1d) At the given budget constraint, the consumer optimum is that the consumer ends up buying 4 units of water and 1 unit of food. The slope of indifference curve > the slope of budget constraint. We get the corner solution. The graph is given below: The consumer optimum is given by MRS= Pw/Pf. The MRS is 4 and the ratio of prices is 1. Therefore the marginal rate of substitution is not same as that ratio of prices. This is because the goods water and food in question are perfect substitutes. Here the consumer buys in extremes. He either buys 4units of water or 1 unit of food. With the given income of 4, he buys 4unit of water and 0 unit of food. To get the Marshallian demands for x2 and y2 where x2 is the quantity of X good purchased by consumer 1 and y2 is the quantity of Y good purchased by consumer2, we set up a Lagrangian function: Z= u(x,y) – l(Px.X+Py.Y-M2) where l is the lambda i.e lagrangian multiplier. 2c) Suppose there are two consumers in the market. For consumer 1 the demand curve is P= a-b Q1 and for consumer 2 the demand curve is P= c-dQ2 where a,b,c,d are constant. To get the market demand curve we have to solve the individual demand curve first. For Consumer 1 the demand is Q1= (a-P)/b and for consumer 2 the demand is Q2= (c-P)/d. The market demand is Q= Q1+Q2. Therefore Q= (a-P)/b +