Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Chapter P3, Problem 7KC
To determine
The
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Q) Price Discrimination: (short Answer)
Why do airlines charge different fares for the same flight?
QUESTION TWO
X limited is a company producing two products A and B. The Marketing Manager has the following
information for the products for the first quarter of 2020:
Product Demand
(Units)
Price
(K`000)
January March January March
A 30 15 10 12
B 25 30 10 2
The Marketing Manager wants to establish the Price Elasticity of Demand (PED) of the two products
and strategize for increase in sales revenue.
Required:
(a) Define Price Elasticity of Demand (PED)
(b) Calculate PED for Product A at price K5,000 per unit
(c) Explain the significance of PED for the Marketing Manager in a country like Zambia.
(d) On the basis of PED for each product the Marketing Manager wants to increase sales
revenue for both products.(i) Interpret the results and
(ii) Indicate the strategic option available for the manager as the projects increase in
sales revenue.
question Completion Status:
QUESTION 20
The basic formula for the price elasticity of demand is:
Oa the total change in demand divided by a change in price
Ob the percentage change in demand divided by a percentage change in price
OC the percentage change in quantity demanded divided by a change in demand
O the percentage change in quantity demanded divided by a percentage change in price
QUESTION 21
An increase in price of product "x" will increase a firm's total revenue if:
Oa the price change is inelastic
Ob the price change is elastic
OC the price change is perfectly elastic
Od the price change is industry elastic
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- subpart d. and e. requiredarrow_forwardRequired: percentage change in Price in D1 equals percentage change in Qd in D1 equals Price Elasticity of Demand in D1 equals percentage change in Qd equals Price Elasticity of Demand in D2 equals D2 has a/an D1 has a/an When Qd responds infinitely despite absence of change in price, the good has a/an: When Qd responds proportionately to change in price, the good has a/an:arrow_forward(Pre-pandemic), Qantas identified that its business traveller customers have a less elastic demand curve for airline travel than non-business customers, as well as shorter intervals between forward and return trips. a) Explain how this market situation provides an opportunity for third- degree price discrimination to increase Qantas profits over a common ticket price for all travellers. b) Suppose that at the current ticket price, the price elasticity of demand for their customers is 0.8. What does this imply for Qantas profits and a more sensible price strategy? c) Assume that the MC per return ticket is constant. Furthermore, suppose Qantas uses the third-degree price discrimination strategy you proposed in (a) and finds that the demand elasticity for return flight tickets with shorter intervals is 2.0, while that for flights with longer intervals is 4.0. Explain with maths how prices in the two markets relate to one another.arrow_forward
- Question attachedarrow_forward8.4 Price-Volume Pricing (Figures 8-23 to 8-25) The price elasticity for personal computers is estimated to be –2. For the PC manufacturer shown, evaluate the sales and profit impact of a 10% price increase and a 10% price decrease. For each pricing strategy, determine the break-even market share and discuss the profit risk associated with it.arrow_forwardANSWER NUMBER 2 ONLY SUBJECT: MANAGERIAL ECONOMICS COURSE CODE: BEC 101arrow_forward
- otherwise I will vote negative.????arrow_forwardQuestion 5 Purebread Bakery has found that the price elasticity of demand for their organic dog biscuits is 0.7 (in absolute value). They decide to have a 10% sale on them. What will happen to Purebread's total revenues on this product? Group of answer choices The sale will increase total revenues. The sale will cause total revenues to decrease. The sale will have no effect on total revenues. There's not enough information to determine the effect on total revenues.arrow_forwardTRUE or FALSE Question: Many airlines have stopped all international flights and 70% of domestic flights in Australia. This is expected to last for 6 months. This means that all airlines should exit the industry. Please give some explanations.arrow_forward
- Use the table below to answer the following questions:QuantityDemand (Price)Marginal RevenueMarginal CostAverage Cost1$120012005005002110010002753883100080022533349006002503135800400400330670020050035876000700407 Are there consumers who want the product but are not willing to pay the profit-maximizing price the firm will charge? How can you tell?If the firm could charge every consumer exactly what that consumer was willing to pay (called perfect price discrimination), would the quantity the firm produced increase, decrease, or remain the same? Would the firm’s profits increase, decrease, or remain the same? Explain your answers.arrow_forwardNote:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardIf the absolute value of the price elasticity of demand for season football tickets is 0.3, to increase total revenue the university should _____. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
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