STUDENT 1
Monopolistic Competition involves many firms competing against each other, but selling products that are distinctive in some way.” (Principles of Economics, 2014) Monopolistic competition firms can increase the demand for their product by differentiating products. A firm can try to make its product different by “physical aspects of product, location, intangible aspects of product, there are called differentiated products.” (Principles of Economics, 2014) They can make their products different from the competitors; for example, I work in the retail industry; I work for Family dollar. At family dollar we carry Our own brand products. So say we carry Fruit loops; we also carry our brand. We also inform the customer in store by placing ads next to each of our brand; for example, our sign would say “Brand name Fruit Loops are $3.00, Family Dollar Brand is $2.00; Save $1.00.” All Family Dollar Products also come stamped with our No hassle Money back guarantee, if you are not satisfied with the product, you can return it within 30 days for a full refund, even if the product is empty. This is how we differentiate our products from brand name. With our lower price, and our guarantee for freshness and return of unsatisfied products, we raise the demand of our product; because we sell more of it than we sell of competitor’s products. The location is also key to sales. We are located centrally in a small town. Outside of Dollar General, we are the 2nd largest retailer in our city. Walmart is located 30 minutes from our town, so they are not convenient for the people who live here.
Response to Post ONE above
I totally agree with you about the definition of the monopolistic competition firms. You have given a good explanation that they can increase the demand for their products through improving the physical aspects of their products. I like the example that you have given about the place you work, Family Dollar. The explanation has made it clearer about how the firm can increase sales without necessarily advertising. In addition, I concur with your point that good location increases the sales of a monopolistic competitive firm.
STUDENT 2
The point of economic activity, however, is not to produce but to consume” (The economist,1998). This quote is a driving force of what an economy wants and needs to be, and trade can make this happen when struggling with other areas. The benefit both parties are receiving is having something they might not have had before the interaction began. When the goods are in the hand of someone else, they are not helping you but when the goods are transferred to you, you can make the most of them if you were needing the goods in the first place. That is how the good don’t change, but the change in ownership helps the party receiving. A lot of the times this is why trading is such a great tool for countries to utilize because most of the time it is a fair exchange of goods helping both parties grow or help them in times of need. Let’s say I was trying to collect an item that my friend had for my collection, and my friend needed and item from me to help his collection. A fair exchange would be in order for both parties to progress their collections while not effecting the items in question, but helping the parties involved. This is how this interaction can happen without changing the trading items for the parties.
Response to Post TWO above
I concur with your explanation of the need and the wants in terms of consumption. This means that for one person to consume, he or she must have a want that is satisfied by another party. It is through the understanding of this exchange that I think that trading between two people is inevitable. It is an inevitable activity if the needs of one party have to be satisfied, which is the main essence of the utility of goods and services. Therefore, I agree that both parties are better off when two individuals trade goods.