Econ Final Essay - Michael Millas 2008 MicroEconomics/1...

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t Visualization Red = Forecast/Recommendation Profile Green = Available Capacity Michael Millas December 7, 2008 MicroEconomics/1 Final Exam Yield Management Yield Management is a key concept for firms to increase their profitability and harness an unconstrained demand. Yield Management Systems forecast unconstrained demand in the future and compare it to the fixed capacity of a firm’s assets. It then makes recommendations of how to price the remaining goods or services, mostly by rejecting certain transactions to meet capacity. In addition, it will increase the quantity demanded if the unconstrained demand is less than capacity. Effect on Consumer Behavior: The Theory of Consumer Behavior states that customers (users) try to derive the most satisfaction possible from consuming a good or service. Consumer Behavior studies how or why consumers purchase different goods. - Total Utility – Total satisfaction a person receives from consuming a particular amount of a good or service - Marginal Utility – Additional utility a person receives from consuming an additional amount of a good or service - Consumers always try to maximize marginal utility; consumer choices are not always rational - Theory of Consumer Behavior assumes that consumption is separate from production - Yield Management tries to increase marginal revenue by knowing that: o Customers are willing to pay a different price for the same product o Consumer preferences make certain goods or services more valuable
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This note was uploaded on 02/23/2009 for the course HADM 1141 taught by Professor Carroll during the Fall '08 term at Cornell University (Engineering School).

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Econ Final Essay - Michael Millas 2008 MicroEconomics/1...

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