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Unformatted text preview: of units that will besold at a given price. Three demand factors affect price: (a) consumer tastes, (b) price and availability of substitute products, and (c) consumer income. These demand factors determine consumers’ willingness and ability to pay for goods and services. Assuming these demand factors remain unchanged, if the price of a product is lowered or raised, then the quantity demanded for it will increase or decrease, respectively. Three important forms of revenues impact a firm’s pricing decisions: (a) total revenue, which is the total money received from the sale of a product; (b) average revenue, which is the average amount of money received for selling one unit of a product (which is simply the price of the unit); and (c) marginal revenue, which is the change in total revenue that results from producing and marketing one additional unit....
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This note was uploaded on 10/21/2009 for the course AEM 2400 taught by Professor Mclaughlin,e. during the Fall '07 term at Cornell.
- Fall '07