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1. Movements along versus shifts of demand curves Consider the market demand for cereal. Complete the following table by indicating whether an event will cause a movement along the demand curve for cereal or a shift of the demand curve for cereal, holding all else constant. Event Movement Along Shift A decrease in the price of cereal An increase in the price of milk (a complement for cereal) OO A change in tastes of consumers that makes them desire more cereal.
2.Alfred Davis and his brother-in-law Hans Wilsdorf founded Wilsdorf and Davis, the company that would eventually become Rolex SA, in London, England in 1905. Wilsdorf and Davis' main commercial activity at the time involved importing Hermann Aegler's Swiss movements to England and placing them in high-quality watch cases made by Dennison and others. These early wristwatches were sold to jewellers, who then put their own names on the dial. The earliest watches from Wilsdorf and Davis were usually hallmarked "W&D" inside the caseback.In 1908 Wilsdorf registered the trademark "Rolex" and opened an office in La Chaux-de-Fonds, Switzerland. The company name "Rolex" was registered on 15 November 1915. In 1919 Wilsdorf left England due to wartime taxes levied on luxury imports as well as to export duties on the silver and gold used for the watch cases driving costs too high and moved the company to Geneva, Switzerland, where it was established as the Rolex Watch Company The first self-winding Rolex wristwatch was offered to the public in 1931 (so-called the "bubbleback" due to the large caseback), preceded to the market by Harwood which patented the design in 1923 and produced the first self-winding watch in 1928, powered by an internal mechanism that used the movement of the wearer's arm. This not only made watch- winding unnecessary, but kept the power from the mainspring more consistent resulting in more reliable time keeping. Its name was later changed to Montres Rolex, SA and finally Rolex, SA. Upon the death of his wife in 1944, Wilsdorf established the Hans Wilsdorf Foundation, a private trust, in which he left all of his Rolex shares, making sure that some of the company's income would go to charity. Wilsdorf died in 1960; since then, the trust has owned and run the company. As of 2010 Rolex watches continue to have a reputation as status symbols. Describe with examples the type of growth (horizontal, vertical, organic, diversified or merger and acquisition) that Rolex has gone through from 1905. (15 Marks) b. Discuss out of the four market structure perfect competition, monopolistic competition, oligopoly and monopoly which market structure does Rolex belong to. (15 Marks) Discuss Rolex's geographic spread around the world and why is it important to have good international trade among countries. (20 Marks) --END OF EXAMINATION-- Foundation Asia Pacific University of Technology and me
1.There is a movement along the curve when there is a change in the price of the product keeping all the other factors constant. There is a shift in the curve when price is constant but there is a change in other factors
Decrease in the price of cereal will cause a movement along the curve because other factors are constant
Increase in price of milk will cause a shift because price of cereal is constant
Change in taste of consumer will cause a shift because price of cereal is constant.
2.
Rolex became king of watches there have been intermiltent uses of a vertical grth model where the watch is manufactured from start to finish by a single company.Rolex make use of this model, and they have a long list of sophisticated machines and talented workforce to design and manufucturing.
b.Perfect competition - perfect competition may be defined as market situation in which there are large number of buyers and sellers with perfect knowledge and in close contact,dealing in identical commodity without price discrimination.
Monopoly - it is a market situation in which competition is zero,there is only one seller of a particular commodity,and he has sufficient control over the supply of the commodity so as to influence the price.
Monopolistic competition - it may be defined as a market situation in which there are large number of byuers and sellers dealing in differentiated products with different prices.
Oligopoly -oligopoly means sale by a few.It may be defined as that form of imperfect competiton in which there are a few firms selling either an identical product or differentiated products.
I believe that Rolex watch industry is dominated by oligopoly,which is beneficial to both firms and consumers.The watch firms are both price makers,which is good for the watchfierms and price takers,which is good for consumers.
c.The Rolex brand is so ingrained in the minds of much of the world.IN 2018,forbes ranked Rolex as the worlds 71st most valuable brand .As of june 2019,among the world top 10 most expensive watches ever sold at auctions,three are Rolex watches.In particular,paul Newmans Rolex daytona currently holds the title of the second most expensive watch ever sold at auction,fetching 17.75 million us dollars in NewYork on october 26, 2017.Rolex is the largest manufactureer of swiss made certifyed chronometers.Rolex still holds the record for the most certified chronometer movements in the cattegory of whirst watchs. Undoubtedly we can say that Rolex will widen the scope of market and use of world resources...
