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how does advertising affect price elasticity?
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- What factors determine the elasticity of demand for a product, and how does elasticity affect pricing decisions by firms? Don't use AiSnooki, a new marketing intern, was a little scatterbrained during the first meeting with her manager, when she made four statements about pricing. Which one of her four statements about pricing was correct? a. A product with an elastic demand is likely to face little competition. b. An EDLP retailer offers many price promotions. c. A product with an elasticity of demand of -0.7 will enjoy increases in revenue when prices are cut. d. Cost-plus pricing is not the perfect pricing strategy because the pricing method ignores customers’ willingness to pay and competitors’ pricing strategy.26) Larry's Carpet Cleaners can influence demand by advertising. Larry charges $50 per carpet, and he cleans 150 carpets per month. The price elasticity of demand is -4, and Larry spends $500 per month on advertising. If Larry is maximizing profits, calculate the advertising elasticity of demand.
- Another word for elasticity isSuppose the accompanying table contains data on how many Veggie Delite sandwiches Subway is willing to sell each day at two different prices. Calculate the daily price elasticity of supply when the price increases from $5.00 to $7.50. Please round to the nearest hundredth. Price(per sandwich) Quantity supplied(sandwiches per day) $5.00 200,000 $7.50 210,000 a. Daily price elasticity of supply for Veggie Delite sandwiches = b. The daily price elasticity of supply for Veggie Delite sandwiches is relatively Elastic or Inelastic Now consider how responsive Subway’s supply of Veggie Delite sandwiches is to changes in price on an annual basis instead of a daily basis. c. Compared to the daily value, the annual price elasticity of supply for Veggie Delite sandwiches is likely to be more Inelastic or Elastic and the annual supply curve is likely Flatter or Steeper to be than the daily supply curve.Each scenario gives some information about price elasticity of demand. For each, calculate the missing data, and determine if the price change under consideration will increase, decrease, or not change the firm's total revenue. Honest Abe's Used Cars estimates the price elasticity of demand for their cars to be -4.1. Last month, Abe tried a new marketing scheme which decreased the number of cars sold by 87%. Abe must have his prices by -27.87 Abe's total revenue by increased and total revenue to increased. At Webs-R-Us, a website design company, the new manager has decided to increase the price of Webs-R-Us services by 15%. She estimates that Webs-R-Us has a price elasticity of demand at -0.30. The manager expects the number of websites designed to decrease increase. %. e %
- Macmillan Learning You have been appointed head of marketing for Barry's Younique Yachts. Barry, the CEO, is interested in determining whether offering his yachts at a lower price would increase the firm's revenue. He asks you for advice. Using your knowledge of elasticity, you should tell Barry that he should increase his prices. Demand for yachts is perfectly inelastic, so a price increase will cause total revenue to increase. that he should reduce his prices. Yachts are luxury goods and therefore exhibit a high price elasticity of demand. Thus, reducing prices would increase revenue. that he should increase his prices. Demand for yachts is likely to be elastic because they are so much fun to drive. Thus, increasing prices would increase revenue. that he should reduce his prices. Yachts are a necessity and therefore have a low price elasticity of demand. Thus, reducing prices would increase revenue.Donna Mia's is currently selling their dinner specials for $15.00 each. The restaurant is thinking about increasing that price by $3.00. They hired an economist to figure out how that would affect total revenue which is currently one hundred and fifty-six thousand dollars a month. The economist estimated that total revenue would fall by about 4.5percent. I A. What is the price elasticity of demand over the relevant range? B. How many dinners will be sold at the new price? C. Explain why this would/would not be a good idea. You must use the elasticity coefficient (explain what the number means), total revenue, and what you know about price elasticity of demand to support your answer. D. Graph this problem.Price elasticity
- The following graph shows the demand curve for kumquats. Points A, B, C, and D mark price ranges over which you will be asked to calculate the price elasticity of demand for this good. Use the purple rectangle labeled Total Revenue (diamond symbols) to compute total revenue at various prices along the demand curve. To see the area of the Total Revenue rectangle, select the shaded area with your mouse. You will not be graded on where you place the rectangle. Total Revenue012345678910109876543210PRICE (Dollars per bushel per month)QUANTITY (Thousands of bushels)ABCD Calculate the price elasticity of demand between points A and B and points C and D using the midpoint method, and fill in the Price Elasticity of Demand column in the following table. Then for each price range, identify if demand is elastic, inelastic, or unit elastic. Price Range Price Elasticity of Demand Elastic, Inelastic, Unit Elastic Change in Total Revenue between Points A and B…I understand how to compute the revenue but I'm stuck on computing the elasticity.
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