Microsoft hires marketing and sales specialists to decide what prices it should set for its products, whereas a wealthy corn farmer in Iowa, who sells his output in the world commodity market, does not.Why is this so?
A)because Microsoft is large enough to hire the best people in the field
B)because Microsoft could potentially lose sales if it sets prices indiscriminately
C)because the wealthy corn farmer is a price maker who sets his price independently of the market price, but Microsoft's optimal output depends on the price it selects
D)because unlike Microsoft, the wealthy corn farmer is probably a monopolist

Question

Quizplus · Accepted Answer

Microsoft operates in a competitive market where setting prices too high could result in lost sales to competitors or even push customers towards substitutes. Thus, it requires specialized professionals to determine the optimal prices that can maximize profits without jeopardizing sales. On the other hand, the corn farmer operates in a commodity market where the prevailing market price is beyond their control. They have to accept the market price for their product as they cannot individually influence it. Hence, the need for pricing specialists is much more crucial for Microsoft than for the corn farmer.

Microsoft Hires Marketing and Sales Specialists to Decide What Prices