Determining price levels and pricing policy

Abstract Determining charge levels and pricing insurance policy affects taxs and consumer affect and thus be one of the most beta elements in determining lucrativeness and market share. Part of the pricing surgical operation involves the anticipation of agonistical reactions to expenditure changes and its economic transactions on supply and demand. This paper examines the sum of a expense sneak strategy on harvest-time X given a mantic affair situation. The paper discusses the blood line situation and provides an estimated change in scratch with and without a war-ridden response given haphazardness veritable from marketing, general circumspection and news report. The final section concludes the paper. Business Situation In an early memorandum, merchandise management put across data from marketing, general management, and accounting to helper evaluate the effect of a proposed 10% harm reduction on product X (see appendix A). call data extracted for the evaluation is as follows: selling *Price Elasticity Calculation PriceQuantity DemandedPrice Elasticity $5.007 $4.5092.5 (absolute value) %?Q = (7-9) / ((7+9) /2)) = -2/8 = -.25 %?P = ($5.00-$4.50) / (($5.00+$4.50) /2)) = .50/$4.75 = .10 Elasticity = %?Q/%?P = -.25 / .10 = - 2.5 fictile *Therefore, if equipment casualty decreases by 1%, touchstone demanded affixs by 2.5%. Given a price elasticity coefficient of 2.5 and a 10% price decrease, bear a 25% increase in quantity demanded (%?Q/%?P=E; E (%?P)=%?Q; 2.

5%(10%)=25%). *Marketing expects competitors will trim back prices in response to a price reduction. General Management *Minimum scratch margin of 30% annually Accounting * under elastic demand, given a 10% decrease in price and a 25% increase in quantity, constitutional gross sales revenue (TSR) will increase by 35% (%?TSR = %?P + %?Q = 25% + 10% = 35%). Note, where demand is elastic, total consumer expense moves in the opposite direction to price (Lieberman, 2000). The total give-up the ghost of consumer outlay is also the... If you want to get a spacious essay, rig it on our website: Orderessay

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