PRICEPROBLEMS

PRICEPROBLEMS - PRICING HOMEWORK PROBLEMS 1. Assume that...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
PRICING HOMEWORK PROBLEMS 1. Assume that for a given product the following price/demand relationships exist. Study the directional changes in price and total revenue and indicate whether demand is elastic or inelastic within the $20 to $25 range and within the $25 to $30 range using the ARC Elasticity formula. b /JwJ J4 h D 20 . 25 Y 25 . 30 Y ARC PRICE QUANTITY DEMANDED $20 62,000 units $25 48,000 units $30 45,000 units 2. The Wino Company plans to introduce a new wine into the marketplace. The product has an annual fixed cost of $2 million and a unit variable cost of $4. The firm's marketing research department estimates the demand schedule below. Relate this information to the concept of breakeven profitability analysis discussed in class and determine at which price the company sell the product given different objectives. Discuss. . Wino J OiJ 200 Y 4 . Y JL H Y LH YW m D s e jmD . PRICE PER BOTTLE DEMAND (BOTTLES) $7.00 1,500,000 6.50 2,000,000 6.00 2,300,000 5.50 2,500,000 3. Wal-Mart is buying 10,000 shirts that will sell to the ultimate consumer for $20 each. Because they are a large retailer and the fact that they do their own warehousing, their
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/15/2010 for the course MKTG 380 taught by Professor Robbins,j during the Spring '08 term at Winthrop.

Page1 / 2

PRICEPROBLEMS - PRICING HOMEWORK PROBLEMS 1. Assume that...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online