What should mercedes do to the price

Reference no: EM133426150

Question: Consider the case of Mercedes-Benz ("Mercedes"), the high-end German auto manufacturer.

a. Would you expect the price elasticity of demand for Mercedes' automobiles to be elastic or inelastic? Base your answer on four of the factors that affect the price elasticity of demand.

b. Given its price elasticity of demand, what should Mercedes do to the price of its cars if it wanted to increase its total revenue? Explain briefly.

c. Given its price elasticity of demand, what should Mercedes-Benz do in terms of strategic positioning? Explain briefly how that strategy would be implemented.

d. In what range would the income elasticity for Mercedes fall? Suppose you are a mutual fund manager that must invest money in stocks. If the global economy is expected to be in a downturn later this year, should you invest in Daimler AG, the parent company of Mercedes, or in another company? Explain briefly.

e. In what range would the cross-price elasticity for Mercedes cars and gasoline fall? Explain briefly.

Reference no: EM133426150

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