Case One:

a.

Our market situation analysis and marketing channels on mushroom farming product:

1. Target Market: To conduct a market situation analysis, it's important to identify our
target market. Are we focusing on individual consumers who are interested in
growing mushrooms at home? or
Are we aiming to supply to restaurants, grocery stores or other businesses?
Understanding our target market's needs, preferences, and behaviour will enable you
to tailor your marketing strategies accordingly.

2. Competitive Landscape: To gain a comprehensive understanding of our market, we

need to analyze our main competitors in the mushroom farming industry. We look at
factors like their product offerings, pricing, distribution channels, marketing tactics
and market share. We recognising their strengths and weaknesses and use this
information to identify opportunities for differentiation and to add unique value to
our product.

3. Consumer Trends and Demographics: As much as possible we have to stay

updated on the latest consumer trends in the mushroom Business. Analyze data on
consumer preferences such as organic or locally sourced mushrooms and identify
any emerging trends or shifts in demand. Additionally, we consider as the
demographics of our target market. Are there specific age groups, geographic
locations or other characteristics that have a higher demand for mushrooms? This
information will help us tailor our marketing messages and identify the most
effective ways to reach our target audience.

4. Marketing Channels: When it comes to marketing channels for our mushroom

farming product, consider the various options available. Direct sales can involve
selling our mushrooms directly to consumers at farmers' markets, through our own
site. Alternatively, we can partner with supermarket, restaurants or other businesses
to distribute our mushrooms on a larger scale. Online platforms and social media are
also valuable channels for creating awareness, engaging with customers and driving
sales. Explore which channels align with our target market and overall marketing
strategy.

By conducting a comprehensive market situation analysis and a wisely considering the

marketing channels, we will be equipped to develop effective strategies to promote and
distribute our mushroom farming product to different customers.
b.
The description and discussion of our market structure for mushroom farming:

1. Nature of Competition: Depending on the specific region and market, the nature of
competition in mushroom farming can vary. If there are numerous farmers
cultivating mushrooms and selling them in the same area, it indicates a competitive
market structure. In such cases, farmers may need to differentiate their products or
find unique selling points to stand out from the competition. On the other hand if
there are only a few dominant mushroom farmers who control a significant portion
of the market, it suggests an oligopolistic market structure. This type of market
structure may lead to more interdependence among the few players and can affect
pricing and strategic decisions within the industry.

2. Number of Buyers: The structure of our market also depends on the number and
characteristics of our buyers. Our product buyers can include individual consumers,
restaurants, supermarkets, wholesale distributors and other businesses. If there are a
limited number of large buyers in our market such as major supermarket chains, it
can lead to a concentrated market structure. This can make it more challenging for
smaller mushroom farmers to access these buyers and compete effectively.
Conversely, if there are many small buyers and no single buyer has significant
market control, it suggests a more fragmented our market structure.

3. Pricing Dynamics: Pricing on our mushroom farming market can be influenced by

various factors. In a perfectly competitive market structure, where many buyers and
sellers exist, prices are typically determined by market forces such as supply and
demand. However, in markets where a few key players have significant control or
market power pricing dynamics may differ. For example, larger mushroom farmers
with market dominance may have more influence in setting prices. Additionally,
factors such as the availability of substitutes, seasonality and market demand can
impact pricing strategies within our market.

4. Entry and Exit Barriers: The ease or difficulty of entering and exiting the
mushroom farming market can shape the market structure. Mushroom farming may
require specialized knowledge, equipment, infrastructure and strict adherence to
quality standards. These factors can act as barriers to entry for new farmers, limiting
the number of market participants and potentially creating monopolistic or
oligopolistic market structures. Conversely, if entry barriers are low, it can lead to
more competition and a larger number of market participants, resulting in a more
competitive market structure.

5. Regulation and Government Intervention: The market structure our mushroom

farming can also be influenced by regulations and government intervention.
Regulations may include quality control measures, certifications, and standards that
ensure the safety and quality of mushrooms in our market.
 Additionally, government policies, subsidies and incentives can impact on our
competitiveness and profitability of mushroom farmers. These regulations and
interventions can shape the market structure by either promoting or hindering market
competition.

c.
The Pricing Strategy for our Business or company:
1. Identify Business Objectives: Start by identifying the specific objectives that our
company aims to achieve through its pricing strategy. This could include factors such
as maximizing profitability, gaining market share, positioning as a premium brand or
driving sales volume.

2. Cost Analysis: Perform a comprehensive analysis of our costs to determine the

minimum price that will cover our expenses and allow for a reasonable profit margin.
Consider all direct costs (e.g. production, packaging) as well as indirect costs (e.g.
marketing, overhead).

3. Value Proposition: Consider the unique selling points and value that our product or
service offers to customers. Focus on understanding the benefits and advantages that
set our offerings apart from competitors. This will help to us gauge the pricing
flexibility and the value our customers perceive.

4. Market Analysis: Conduct a thorough analysis of our target market including

customer preferences, purchasing behaviour and price sensitivity. Identify
competitors and understand their pricing strategies, product positioning and target
market segments. This analysis will provide crucial insights into how our pricing
strategy should be structured to remain competitive.

5. Pricing Approaches: Once we have conducted market and cost analysis consider the
appropriate pricing approach for our company. In addition on this approach:

 Cost-Based Pricing: Add a mark up to our costs to set the price. This
approach ensures to us cover expenses and generates profits. However, it
does not consider market dynamics or customer value perceptions.

 Value-Based Pricing: Set prices based on the value our product or service
provides to customers. This approach focuses on capturing the perceived
value and aligning prices with customer expectations.

 Competitor-Based Pricing: Set prices based on the prices charged by our

competitors. This approach involves pricing above, below or at par with
competitors depending on our positioning and differentiation strategy.

 Dynamic Pricing: Adjust prices dynamically based on factors such as

demand fluctuations, seasonality or market conditions. This approach allows
for flexibility and optimization to our maximize revenues.
 6. Pricing Strategies: Determine if any particular pricing strategies align with our
objectives and target market. Some examples include:

 Premium Pricing: Position our product or service as premium and set higher
prices to communicate exclusivity or superior quality.

 Penetration Pricing: Set lower prices to quickly gain market share or attract
price-sensitive customers. This strategy is often used when entering a new
market or launching a new product.

 Skimming Pricing: Start with high prices and gradually lower them to attract
different market segments. This strategy targets customers who are willing to
pay a premium for innovative or unique offerings.

 Price Bundling: Offer multiple products or services together at a discounted

price. This strategy encourages customers to purchase more items and can
increase the overall value perception.

 Promotional Pricing: Temporarily reduce prices or offer discounts to

stimulate sales, generate buzz or clear inventory.

7. Monitor and Adjust: Continuously monitor market conditions competitor activities

and customer feedback. Analyze the impact of pricing decisions on sales,
profitability, customer satisfaction and overall business performance. Adjust prices
as needed to remain competitive or to align with changes in market dynamics and
customer preferences.

By creating and implementing a pricing strategy requires careful analysis, monitoring and
adaptation. Regularly review and refine our pricing strategy to ensure it remains effective in
achieving our business objectives and remains responsive to market conditions.

Case Two:
a.

To determine the equilibrium price and quantity, we need to find the point where the
demand and supply functions intersect. In other words we need to solve the equations:

25−0.05 Df =0.04 S f +16

By rearranging the equation, we get:

0.05 Df + 0.04 S f =9

Since Df represents the quantity demanded of fish and S f represents the quantity supplied of
fish, we can consider them equal at equilibrium, so we can substitute Df =S f :

0.05 Df + 0.04 Df =9
Combining like terms, we have:

0.09 Df =9

Dividing both sides by 0.09 , we find

Df =100

So at equilibrium the quantity demanded and supplied will be 100 kilograms of fish.

To determine the equilibrium price we substitute the value of Df or S f into either the
demand or supply function. Let's choose the demand function:

Pf =25−0.05 Df

Pf =25−0.05(100)

Pf =25−5

Pf =20

Therefore, at equilibrium the price of a kilogram of fish would be 20 Birr .

b.

Setting a price floor of Br 10 per kilogram of fish in response to the over-exploitation of

Lake Abaya by the Ethiopian Natural Resources Conservation Authority may have some
effectiveness in addressing the issue. However, there are several factors to consider when
evaluating its overall effectiveness:

1. Conservation Impact: The price floor aims to discourage excessive exploitation of

Lake Abaya's fish resources by increasing the cost of fish. By setting a higher price,
it may incentivize fishermen and suppliers to reduce their fishing efforts and allow
the lake to recover. However, the extent of the conservation impact depends on the
responsiveness of fishermen and the market to the price increase. If the price increase
does not significantly curtail fishing efforts the effectiveness may be limited.

2. Enforcement: The success of the price floor policy hinges on effective enforcement
by the authority. Regular monitoring and strict penalties for non-compliance are
crucial. Without robust enforcement mechanisms, some suppliers may continue to
sell fish below the price floor or resort to unregulated markets, undermining the
effectiveness of the policy.

3. Market Dynamics: A price floor above the equilibrium price can potentially lead to
a surplus of fish, as the quantity supplied at the higher price may exceed the quantity
demanded. This surplus could result in unsold fish or a shift towards informal
markets, diminishing the policy's effectiveness. However, if market demand remains
stable and suppliers adjust their production accordingly, the price floor may
effectively reduce the amount of fish extracted from the lake.
 4. Socioeconomic Considerations: While the price floor may promote conservation, it
can also have socioeconomic implications. The higher price of fish may
disproportionately affect lower-income consumers who rely on affordable fish for
their nutrition. It is crucial to consider the potential negative impact on food security
and livelihoods, especially among vulnerable communities, and devise measures to
mitigate these effects.

5. Complementary Policies: A price floor alone may not be sufficient to address over-
exploitation fully. It is crucial to complement it with other measures such as stricter
fishing regulations, sustainable fishing practices, or even initiatives to promote
alternative livelihoods for affected communities. A comprehensive approach that
combines multiple strategies can enhance the effectiveness of the policy in achieving
conservation goals.

In General, the effectiveness of the price floor policy in addressing over-exploitation

depends on factors such as its impact on fishing behaviour, enforcement capabilities, market
dynamics, socioeconomic considerations and the presence of complementary measures.
Continuous monitoring, evaluation and adjustments to the policy based on observed
outcomes are essential to ensure its effectiveness in sustainable resource management.
#3.
a.
The values of Average Product (AP) and Marginal Product (MP): Based on the table given
with the values for Machineries and Labour we can calculate the corresponding values of AP
and MP using the formulas.

To calculate the Average Product (AP), we divide the Total Product (TP) by the
corresponding level of Labour input.

Average Product (AP): Marginal Product (MP):

TP MP=TP(n )−TP(n−1)
AP=
Labour input
Labour = 1: Labour = 1:
TP(1) 2 MP=TP(1) −TP(0) =2−0=2
AP= = =2
1 1
Labour = 2: Labour = 2:
TP(2) 5 MP=TP(2) −TP(1)=5−2=3
AP= = =2.5
2 2
Labour = 3:
TP(3) 9 Labour = 3:
AP= = =3 MP=TP(3) −TP(2) =9−5=4
3 3
Labour = 4:
TP(4) 12 Labour = 4:
AP= = =3 MP=TP(4 )−TP(3)=12−9=3
4 4
Labour = 5:
TP(5) 14 Labour = 5:
AP= = =2.8 MP=TP(5) −TP(4 )=14−12=2
5 5
Labour = 6:
TP(6) 15 Labour = 6:
AP= = =2.5 MP=TP(6 )−TP(5) =15−14=1
6 6
Labour = 7:
TP(7) 15 Labour r = 7:
AP= = ≈ 2.14 MP=TP(7 )−TP(6 )=15−15=0
7 7
Labour = 8:
TP(8) 14 Labour = 8:
AP= = ≈ 1.75 MP=TP(8 )−TP(7 )=14−15=−1
8 8
Labour = 9:
TP(9) 12 Labour = 9:
AP= = ≈1.33 MP=TP(9 )−TP(8 )=12−14=−2
9 9
So, these are the detailed calculations of the Average Product (AP) and Marginal Product
(MP) based on the given data. As we summarize

Machineries in Labour in Work

TP AP MP Stage of Production
Number Hour
10 0 0 - - -
10 1 2 2 2 Increasing
10 2 5 2.5 3 Increasing
10 3 9 3 4 Increasing
10 4 12 3 3 Increasing
10 5 14 2.8 2 Decreasing
10 6 15 2.5 1 Decreasing
10 7 15 2.14 0 Decreasing
10 8 14 1.75 -1 Decreasing
10 9 12 1.33 -2 Decreasing

b.

A graphical representation of the Total Product (TP), Average Product (AP) and Marginal
Product (MP) of labour based on from the table.

TP Curve:

The TP curve represents the total output (TP) produced as the labour input increases.
From the table, the TP values are as follows:

Labour 0 1 2 3 4 5 6 7 8 9
TP 0 2 5 9 12 14 15 15 14 12

TP
16
14
12
10
8
6
4
2
0
0 1 2 3 4 5 6 7 8 9 10
AP Curve:

The AP curve represents the average output (AP) per unit of labour input. The AP values
can be calculated by dividing TP by the labour input. The AP values based on the given data
are as follows:

Labour 0 1 2 3 4 5 6 7 8 9
2.5 - 2 3 4 3 2.8 2.5 2.1 1.75 1.33
4

3.5

2.5

1.5

0.5

0
0 1 2 3 4 5 6 7 8 9

MP Curve:

The MP curve represents the additional output (MP) gained from each additional unit of
labour input. The MP values can be calculated by finding the change in TP from the
previous point. The MP values based on the given data are as follows:

Labour 0 1 2 3 4 5 6 7 8 9
MP - 2 3 4 3 2 1 0 -1 -2

MP
5
4
3
2
1
0
-1 0 1 2 3 4 5 6 7 8 9
-2
-3