Increase its revenue by raising the price

Assignment Help Business Economics

Reference no: EM131095398

Critical Thinking: Let's say your company sells units of salt for $1.00 and wants to increase its revenue by raising the price to $1.20 per unit. We know, from the table on page 102, the price elasticity of demand for salt is 0.1. A member of marketing says that means if we raise price 20%, we will see a 2% reduction in sales. Is there anything wrong with this reasoning? Discuss what is right and wrong with this conclusion.

Reference no: EM131095398

Questions Cloud

The price of the impacted product : Identify one example of a price control that is used in the United States or in another country. Does the price control benefit or harm producers and/or consumers? Why? If the price control were not in place, what would happen to the price of the imp..

The marginal propensity to consume : Calculate the government-spending multiplier in each of the following examples.

Government-taxation multiplier for each marginal propensity : Calculate the government-taxation multiplier for each marginal propensity to consume. What do your results imply about the relative strength of changes in government spending versus changes in taxation for fiscal policy, all else equal?

Classification of data and variables : Classification of data and variables

Increase its revenue by raising the price : Let's say your company sells units of salt for $1.00 and wants to increase its revenue by raising the price to $1.20 per unit. We know, from the table on page 102, the price elasticity of demand for salt is 0.1. A member of marketing says that means ..

Describe the products and services : Describe the products and services of commercial, public and third sector organizations?

What is the aggregate demand curve : The AS/AD model is an excellent way to understand how specific policies and actions affect output and prices in an economy. What is the aggregate demand (AD) curve? What are the components of AD? What factors can shift the AD curve?

Rent control appears to be efficient technique presently : The famous Swedish economist Assar Lindbeck remarked in his book on rent controls, “rent control appears to be the most efficient technique presently known to destroy a city-except ofr bombing”. Why would Professor Lindbeck think rent controls are de..

Write a criteria to select right sequencing method : Write a Criteria to Select Right Sequencing Method Carify the Some of the Important Sequencing Methods:

User Account

All Pages