Economic Case Study Essay

Open, View, and/or
Download this Document

Total Length: 542 words ( 2 double-spaced pages)

Total Sources: 3

Page 1 of 2

Demand Estimation

First, it is crucial that we calculate the Q. value in order to find the elasticities of the other independent variables. This can be done by plugging in the assigned values for each of the independent variables provided by the problem case study. According to the research, "price elasticity of demand is the percentage change in quantity demanded as a result of a 1% change in price" (Fibich, 2005). Thus, it can be determined with the following equations:

Q= -5,200-42P + 20Px +5.2Y + 0.20A + 0.25M

Q= -5,200-42(500) + 20(600) + 5.2(5,500) + 0.20(10,000) + 0.25(5,000)

Q= 17,650

Price of Product (P)

ED=?P / ?Q x P/Q

=-42 x 500/17,650

Price of Competitor's Product (Px)

ED=?Px / ?Q x Px/Q =20 x 600/17,650

=0.6798

Per Capita Income (Y)

ED=?Q / ?Y x Y/Q

=5.2 x 5,500 / 17,650

= 1.

Stuck Writing Your "Economic Case Study" Essay?

View All Our Example Economic Case Study Essay

Have A Custom Example Essay Written

6203

Monthly Advertising Expenditure (A)

ED=?A / ?Q x Q/A

=0.2 x 10,000/17,650

= 0.1133

Number of Microwaves Sold in the Market (M)

ED=?Q / ?M x M/Q

=0.25 x 5,000/17,650

=0.07082

Question 2

Clearly, there are implications for both long and short-term pricing strategies. Essentially, cutting the price would immediately increase the demand. However, it would begin to eat away at the organization's supply if done too aggressively. This would ultimately force the company to increase production, which would require investments in production capacity. For more long-term profit potential, price should be set so that the demand can be met long-term as well. Ultimately, the best pricing strategy aims to grow profit potential, but also the consumer base as well (Saunders, 2013)......

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Economic Case Study" (2014, July 20) Retrieved July 5, 2025, from
https://www.aceyourpaper.com/essays/economic-case-study-190656

Latest MLA Format (8th edition)

Copy Reference
"Economic Case Study" 20 July 2014. Web.5 July. 2025. <
https://www.aceyourpaper.com/essays/economic-case-study-190656>

Latest Chicago Format (16th edition)

Copy Reference
"Economic Case Study", 20 July 2014, Accessed.5 July. 2025,
https://www.aceyourpaper.com/essays/economic-case-study-190656
   

Open, View, and/or
Download this Document
order custom essay example