Answer the following exercises using outside references and apply the principles to your own work experience: Write an essay on each of the following topics using a total of six references:
If the demand for a product is inelastic, what will happen to total revenue if price is increased?
Define and explain the differences between economies of scale and economies of scope. Define learning effects and explain the differences between economies of scale and learning effects.
What four basic conditions characterize a competitive market?
Explain why perfect personalized pricing is typically more profitable than menu pricing. Why then do companies use menu pricing?
Consider three firms: (1) a shoe store at the mall, (2) a manufacturer that produces racing boats, and (3) a city-wide house painting firm. (a) Compare the firms. Which firm would you expect to engage in the most price discrimination and why? (b) How could having an eBusiness Web site for each of the firms possibly change the pricing policies, customer service, and available information of these three types of businesses to consumers? Explain your position for each company.
If the demand for a product is inelastic, an increase in price leads to an increase in total revenue. Now an inelastic demand means the elasticity of demand is greater than -1. Inelastic demand is one in which the elasticity is between -1 and 0. Total revenue is price X quantity demanded. The elasticity is % change in quantity demanded/% change in price. This means that if the elasticity is more than -1 and equal to or lower than 0, then the total revenue will increase.
In my work experience, when my employer increased the prices of industrial lubricant, the quantity sold declined. I understood that the demand for industrial lubricants was elastic.
Economies of scale happen when a firm gets cost advantages because of expansion. Economies of scope happen when a firm gets cost advantages because of the expansion in the number of different goods produced. Economies of scale are realized because of reductions in unit cost as the size of a facility and the usage levels of other factors of production increase. Economies of scope are realized when the different goods being produced share the use of the same premises, manufacturing facilities, and storage facilities.
In my work experience, when production of industrial ...
Marketing Management is discussed in great detail in this solution.