Q D.1.4.2 Discussion -Monopolistic Competition - Group D 5 From ECON-102-OMH-CRN55774 In the Monopolistic Competition Market, firms can be making profits, breaking even, and taking losses all at the same time. Profit Normal Profit- Loss Detrich Mateschitz, an Austrian, was a salesperson. He sold the toothpaste for a German company in East Asia. Being tired from the long trips between Germany and East Asia, he noticed that there were energy drinks all over East Asia but no such drinks in the West. He "took" the formula for one of the drinks and adapted it. The formula was for a drink from Thailand named Kating Deng, or red water buffalo. He named his drink Red Bull. He marketed his "Energy Drink "first in Austria and then over much of the rest of Europe. He aimed his advertising at younger people and the drink was a big success. Red Bull came to America in 1997 and by the early 21st century, Red Bull was selling over one billion can a year. The success of Red Bull has created many imitators (substitutes) who entered the market. At last count, there were over 150 competing products. Coca Cola and Pepsi Cola have created products to compete with Red Bull. Imitators will continue to enter until the economic profits have returned to zero. But in the meantime, Detrich Mateschitz is a billionaire Red Bull is sold in a competitive market with many substitutes (150) according to the article, yet the brand name Red Bull is often used to describe ALL energy drinks. Examples of products whose Brand is recognized for the market. • "I need a Band Aid." bandage • "I'll have a Coke" used for any cola beverage. • "I'm looking for an iPhone," meaning any smart phone. • C.2.2.2. Advanced Explanation -Industry Structure- Perfect Competition v. Imperfect Competition • D.1.2.3 Advanced Explanation- Monopolistic Competition Discussion Question: 1. Identify the Firm Model from above when Red Bull created the Energy Drink Market. Explain why you selected specific firm type. 2. According to the article, what happened to the Energy Drink Market over the next few years? 3. State how these changes impacted the Demand and Marginal Revenue curves of Red Bull. 4. Will Red Bull lose its profit based status in this market- Yes or No- Defend your position. Need Help? D.1.2.3 Advanced Explanation- Monopolistic Competition Discussion Question Requirements: Each student is required to post a 150 word response to the question. The student then must post at least a 50 word response to at lease ONE other student post. Post-=4 points. Comment = 2 Points Submit Original Post by the Due Date. Comments are open for four (4) days after the Due Date or until the Available Until Date