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.
Where do I Access the gss04student_corrected dataset
Old Faithful Geyser in Yellowstone National Park derives its names and fame from the regularity (and beauty) of its eruptions. Rangers usually post the predicted times of eruptions
Consider the sample of 60 package design ratings given in the table below. A Sample of Package Design Ratings (Composite S
Statistical Errors Statistical data are obtained either by measurement or by observation. Hence to think of perfect accuracy is only a delusion or a myth, It is no
CERTIFICATE OF AIRWORTHINESS FOR EXPORT When aircraft manufacturers go into series production of a new type of aircraft, then obviously they are hopeful of world wide sales. Sim
Examine the given statement, then express the null hypothesis H0 and the alternative hypothesis H1 in symbolic form. The mean weight of women who won a beauty pageant is equal t
Different analyses of recurrent events data: The bladder cancer data listed in Wei, Lin, and Weissfeld (1989) is used in Example 54.8/49.8 of SAS to illustrate different anal
two application of statistics
Large Sample Test for Mean A random sample of size n (n > 30) has a sample mean . To test the hypothesis that the population mean μ has a specified value μ 0 let us formu
Consider a Cournot duopoly with two firms (firm 1 and firm 2) operating in a market with linear inverse Demand P(Q) = x Q where Q is the sum of the quantities produced by both
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