• Demand is the amount of good or service that consumers and businesses are willing and able to buy at a given time period. Supply is the quantity of a product that a producer is willing and able to supply onto the market at a given price in a given time period. Lindt Company offers luxury types of chocolate where only those people who are in middle and high income can afford to buy a luxury good such as the Lindt chocolate. Luxury good is when the demand rises more than proportionate to a change in income. As there are lots of company or firm that offers a chocolate product, it allows the Lindt Company to have a lot of competitors that offer the same product. This clearly shows that Lindt Company has a market structure of perfect competition. As the Lindt Company has a strong competitors generating strong brand loyalty and the market, then there is a difficulty in entry.
In perfect competition, Lindt Company has no choice but to charge the market price as they are the price takers in this market structure and must charge the same as everyone else in order to be able to compete with their competitors especially those firms who offer the same luxury chocolate good such as Toblerone and Ferrero Rocher.