100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Previously searched by you
Previously searched by you
logo
Managerial Economics (Froeb) - Ch 6 Simple Pricing Exam Questions With Correct Answers. $10.49
Add to cart
Quickly navigate to
Preview
  2.  
  3. Managerial Economics
  4.  
  5. Managerial Economics

Exam (elaborations)

Managerial Economics (Froeb) - Ch 6 Simple Pricing Exam Questions With Correct Answers.
 0 purchase
  • Course
  • Managerial Economics
  • Institution
  • Managerial Economics

Managerial Economics (Froeb) - Ch 6 Simple Pricing Exam Questions With Correct Answers. Individual demand - answerHow many units an individual will purchase at a given price Aggregate demand - answeralso called market demand the total number of units that will be purchased by a group of consum...

[Show more]

Preview 2 out of 5  pages

Document information

  • November 3, 2024
  • 5
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

Subjects

  • managerial economics froeb ch 6 simple pricing

Written for

  • Managerial Economics
  • Managerial Economics

Seller

avatar-seller
Thebright

Reviews received

Content preview

©THEBRIGHT EXAM SOLUTIONS
10/30/2024 10:31 PM


Managerial Economics (Froeb) - Ch 6 Simple
Pricing Exam Questions With Correct
Answers.
Individual demand - answer✔How many units an individual will purchase at a given price

Aggregate demand - answer✔also called market demand
the total number of units that will be purchased by a group of consumers at a given price

What kind of decision is pricing? - answer✔Extent decision

When should price be reduced? Increased? - answer✔Reduce price (increase quantity) if MR >
MC
Increase price (reduce quantity) if MR < MC

What is the optimal price? - answer✔Where MR = MC

Price elasticity of demand - answer✔Measure of how responsive quantity demanded is to
changes in price


Price elasticity of demand (e) = (% change in quantity demanded) / (% change in price)


if absolute value of e is >1 then demand is elastic
if absolute value of e is <1 then demand is inelastic


Estimated price elasticity = [(Qt-Q2)/(Q1+Q2)] / i(P1-P2)/(P1+P2)]
this equation is used to estimate demand from a price and quantity change
What happens to revenue when prices increase in a product with elastic demand? -
answer✔Revenue decreases

, ©THEBRIGHT EXAM SOLUTIONS
10/30/2024 10:31 PM

What happens to revenue when prices increase in a product with inelastic demand? -
answer✔Revenue increases

The more elastic a product is the _____ the optimal price - answer✔lower
The five factors that affect elasticity:
(answer "more" or "less")
1. Products with close substitutes have ____ elastic demand
2. Products with any complements have _____ elastic demand
3. Demand for brands is _____ elastic than industry demand
4. In the long run, demand becomes _____ elastic

5. As price increases, demand becomes _____ elastic - answer✔1. more
2. less
3. more
4. more
5. more

What are three other measures of elasticity that affect demand? - answer✔income elasticity
cross-price elasticity
advertising elasticity

Stay-even analysis - answer✔can be used to determine the quantity change required to offset a
price change
%change quantity = %change price / (%change price + margin)

When is a proposed price increase profitable? (regarding stay-even quantity) - answer✔If the
predicted quantity loss is less than the stay-even quantity

%change Revenue - answer✔%change Revenue = %change Price + %change Quantity

How to use elasticity to forecast changes in demand - answer✔%change Quantity = %change
Price / (%change Price + margin)
Jim has estimated elasticity of demand for gasoline to be -0.7 in the short run and -1.8 in the long
run. A decrease in taxes on gasoline would

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller Thebright. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $10.49. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

69252 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 15 years now

Start selling
$10.49
  • (0)
Add to cart
Added