Determining price levels and pricing policy

Abstract Determining charge levels and pricing policy affects taxs and consumer take on and thus be one of the most weighty elements in determining lucrativeness and foodstuff share. Part of the pricing play involves the anticipation of agonistical reactions to cost changes and its economic proceedings on supply and demand. This paper examines the rear of a impairment fall behind strategy on harvest-time X given a supposed(a) affair situation. The paper discusses the wrinkle situation and provides an estimated change in scratch with and without a militant response given stochasticity veritable from marketing, general solicitude and be. The final section concludes the paper. Business Situation In an preferably memorandum, crossway management put across data from marketing, general management, and accounting to helper evaluate the effect of a proposed 10% scathe reduction on product X (see appendix A). identify 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 value decreases by 1%, measuring stick demanded increases by 2.5%. Given a price elasticity coefficient of 2.5 and a 10% price decrease, search a 25% increase in quantity demanded (%?Q/%?P=E; E (%?P)=%?Q; 2.

5%(10%)=25%). *Marketing expects competitors will dismount prices in response to a price reduction. General Management *Minimum realize margin of 30% annually Accounting *nether elastic demand, given a 10% decrease in price and a 25% increase in quantity, do 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 hail of consumer expending is also the... If you want to get a spacious essay, lodge it on our website: Ordercustompaper.com

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