Price elasticity of demand
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I work in hotel management. How can I increase the company's revenue, how would can I use price elasticity of demand to determine whether to increase or decrease the price?
I would like examples and details.
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This posting answers questions involving the price elasticity of demand
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I work in hotel management. How can I increase the company's revenue, how would can I use price elasticity of demand to determine whether to increase or decrease the price?
I would like examples and details.
I work in hotel management. How can I increase the company's revenue, how would can I use price elasticity of demand to determine whether to increase or decrease the price?
My Response
Revenue is a function of quantity demanded for the product and the price, which is charged for the product.
Expected Revenues= No. of expected buyer*quantity purchased by an average buyer*price of an average unit
Company Sales Forecast: is the expected level of company sales based on a chosen marketing plan and an assumed marketing environment.
The various ways of estimating demand are:
1. Historical Sales figures
2. Forecasting current Demand by regression analysis, trend analysis
3. Estimating Industry growth
4. Estimating Economy's growth
Forces of Supply and Demand
Supply and demand curves shows how the quantity demanded or supplied changes in response to a change in the price of that good. The law of demand states that as the price goes up, the quantity demanded goes down, other things constant. An alternative way of saying the same thing is that price and quantity demanded are inversely related, so the demand curve slopes downward to the right. The law of supply states quantity supplied rises as price rises, other things ...
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