A 40 percent price reduction of The Times led to a 17.5 per cent increase in its sales. Price elasticity of demand for The Times: -0.44 Note: The revenue earned by The Times fell from £169,576 to £134,689! Competing papers suffered! Independent suffered most, with a 15.2 percent loss of sales, indicating a cross-price elasticity of 0.38 Cross-price elasticity for the Guardian was 0.11, and that for the Daily Telegraph was 0.05.
A 40 percent price reduction of The Times led to a 17.5 per cent increase in its sales. Price elasticity of demand for The Times: -0.44 Note: The revenue earned by The Times fell from £169,576 to £134,689! Competing papers suffered! Independent suffered most, with a 15.2 percent loss of sales, indicating a cross-price elasticity of 0.38 Cross-price elasticity for the Guardian was 0.11, and that for the Daily Telegraph was 0.05.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Consequence
A 40 percent price reduction of The Times led to a 17.5 per
cent increase in its sales.
Note: The revenue earned by The Times fell from
£169,576 to £134,689!
Competing papers suffered!
Independent suffered most, with a 15.2 percent loss of sales,
indicating a cross-price elasticity of 0.38
Cross-price elasticity for the Guardian was 0.11, and that for
the Daily Telegraph was 0.05.
Implications?
What do you expect would happen to the sales of The Financial
Times?
Why did The Times adopt a strategy of price cut?
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