Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Analytical Approach
We will illustrate this through an example.
Example 1
A firm sells a product in a market with a few competitors. The average price charged by the competitors is Rs.10. The firm can follow any one of the pricing policies given below:
Match the competition price at Rs.10
Price two rupees above the competition at Rs.12
Price two rupees below the competition at Rs.8.
The firm knows the quantities it can sell at these prices:
Price (Rs.)
Quantity (Nos.)
8
10
12
15,000
10,000
7,500
The total cost of production is as below:
Quantity
Cost (Rs.)
95,000
80,000
75,000
To find out the price that the firm should charge, we must first determine the objective of the firm. Let us assume that the objective of the firm is to maximize profits. (The firm could easily have other objectives - to price the product always below the competitor's price in which case Rs.8 would be chosen or to price the product always above the competitors' price so that a higher price can be used to create the impression of a better quality in the minds of the consumers. In the latter case Rs.12 would be chosen).
To find out the price which would maximize the profits, we construct the following table:
Sales Quantity (Nos.)
Sales Value
Profit (Rs.)
1,20,000
25,000
1,00,000
20,000
90,000
We thus find that the profits are maximized at the price of Rs.8 per unit, and therefore this price should be chosen.
Though the analytical approach is quite simple and intuitive, it may not be possible to adopt this in all decision making situations. In reality, information regarding the average price charged by the competitors may not be available or may be dependent upon the price charged by the firm as the competitors may react to every change effected by the firm. The information regarding the exact quantities that can be sold at different prices may not be available or only a possible range of quantities may be known. Similarly, the cost of producing different quantities may not be exactly known.
Ask questiovdgngddndgdngngngngn #Minimum 100 words accepted#
Deviation Measures The drawback of the range as a measure of dispersion is that it takes into account the values of only two data points - the largest and the smallest. One
The Null Hypothesis - H0: The random errors will be normally distributed The Alternative Hypothesis - H1: The random errors are not normally distributed Reject H0: when P-v
In a management class of 100 childerns' 3 languages are offered as an additional subject viz. Hindi, English and Kannada. There are 28 childrens taking Hindi, 26 taking Hindi and 1
Assumptions in Regression To understand the properties underlying the regression line, let us go back to the example of model exam and main exam. Now we can find an estimate o
Construct index numbers of price for the following data by applying: i) Laspeyre’s method ii) Paasche’s method iii) Fisher’s Ideal Index number
There are n seats on an airplane and n passengers have bought tickets. Unfortunately, the first passenger to enter the plane has lost his ticket and, so he just chooses a seat at r
PROPERTIES 1. The value of standard deviation remains the same if, in a series each of the observation is increased or decreased by a constant quantity. In statistical lan
What is an example of a real life situation when I would use each of these test
1. Recognize and explain the opportunities for statistical learning. 2. Describe how the use of statistics supports student learning. 3. Recognize appropriate data displays a
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd