Concept Integration. Review the theory ofsupply and demand in Chapter 2 (see pages 39–43).How do skimming and penetration pricing strategiesinfluence a product’s supply and demand?
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Concept Integration. Review the theory of
How do skimming and penetration pricing strategies
influence a product’s supply and demand?
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- Leah and Shota can purchase an airplane ticket, a car rental, or both items. Leah has value x for the plane and 6 for the car, while Shota has value 20 for the plane and 2 for the car. A travel website can sell the products individually, sell the products in a bundle, or sell a combination of individual items and a bundle. Leah Shota Plane Car 6 2 X 20 For each of the following pricing strategies, calculate the possible values of r (i.e. z 30 or 3 ≤ x ≤7) which make this pricing strategy optimal, or explain why it is never optimal. You can restrict your answer to integer values of x. 1. Sell the bundle to Leah and sell nothing to Shota. 2. Sell a plane ticket to both Leah and Shota, and also sell a car rental to Leah. 3. Sell a car rental to Shota and a plane ticket to Leah. 4. Sell a car rental to Leah and the bundle to Shota.Identify nine common pricing methods.Describe the difference between an everyday low price strategy (EDLP) and a high/low price strategy
- Explain the type of pricing strategy that you as a manager of a company would implement for Good X and Good Y with the following price elasticity of demand co efficients. Use diagrams to motivate your answer. a) Good X: 2.3 b) Good Y: 0.6Substitutes, complements, or unrelated? You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: guppy gummies, frizzles, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of guppy gummies decreases by 4%, the quantity of frizzles sold decreases by 4% and the quantity of kipples sold increases by 3%. Your job is to use the cross-price elasticity between guppy gummies and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following…Substitutes, complements, or unrelated? You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: splishy splashers, raskels, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of splishy splashers decreases by 8%, the quantity of raskels sold increases by 6% and the quantity of kipples sold decreases by 8%. Your job is to use the cross-price elasticity between splishy splashers and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the…
- Identify the five pricing policy decisionsmarketers must makeUsing a diagram of either the profit-maximising firm or the consumer choice model, demonstrate how two-part pricing can increase profits for the firm compared with a single price per unit. Why does two-part pricing work best for goods with homogeneous demand?A large restaurant chain sells hamburgers and French fries as separate products. There are 2 million consumers across all of the restaurant's locations. Of those, 1 million consumers value hamburgers at $5 and French fries at $1, while the other 1 million value hamburgers at $3 and French fries at $3. The restaurant is considering three pricing strategies: Sell hamburgers for $5 and French fries for $3. Sell hamburgers for $4 and French fries for $2 Sell hamburgers and French fries as one product combined for $6. Calculate the restaurant's profit under each strategy. Which of these pricing strategies should the restaurant adopt to maximize its profits?
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