What Are the Two Fundamental Principles Associated with Customer Behaviour

question 97

Essay

What are the two fundamental principles associated with customer behaviour?

Recognize the significance of internalizing external costs and benefits to achieve social efficiency.

Apply the concepts of externalities to various real-world markets such as tobacco, pollution control technology, and antibiotic usage.

Understand and analyze the tools for internalizing positive and negative technology spillovers.

Interpret graphical representations of markets with externalities to identify equilibrium and socially optimal outcomes.

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Definitions:

Chase Strategy

A production planning method that adjusts workforce levels and production rates to match demand, minimizing inventory levels and workforce costs.

Level Strategy

An inventory management strategy where production rates or workforce levels are kept constant despite demand fluctuations.

Formal Planning Model

A structured approach to planning that involves systematic procedures and methodologies to achieve specified objectives.

Pure Level Strategy

A production strategy where the output rates are kept constant and inventory is used to absorb fluctuations in demand.