If a company successfully advertises its product, do we expect the price elasticity of demand for this firm’s perceived demand curve to increase, decrease, or remain the same? In a few sentences, Explain how advertising can cause this effect.
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If a company successfully advertises its product, do we expect the price
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- If a company successfully advertises its product, do we expect the price elasticity of demand for this firms perceived demand curved to increase, decrease or remain the same? Explain how advertising can cause this effect.How might advertising lead to a shift in the demand curveExplain why the advertising elasticity of the market demand for beer may be less than the advertising elasticity of the demand for one particular brand.
- In the market for alcoholic beverages, a business called Drive-thru Bottle Shop offers a variety of different bottled wines to their customers. They stock many brands, some being very well-known, with others less well known. Answer the following questions:a. If a wine has significant brand recognition and customer loyalty, then the point price elasticity of demand at a given price for this wine would elastic than the point price elasticity be of demand of a similar wine where the wine maker has little brand recognition and customer loyal, ceteris paribus. Type L for Less, M for More or E for Equally. b. The demand for a particular wine sees customers purchase 6,000 bottles of wine when the price is $7.99 per bottle, and only 5,000 bottles when the price was increased to $8.49 by the Drive-thru Bottle Shop management. What is the price elasticity of demand using the mid-point formula? Answer to the nearest two decimal places. C. Assume the Drive-thru Bottle Shop is trying to maximise…how does advertising affect price elasticity?Elasticity & Total Revenue Please fill-in the empty cells in the table below. Explain the relationship between the elasticity of demand and the total revenue (TR). What pricing strategy can you recommend? Price Qd Elasticity of demand TR=PxQ 0 20 - - 0 5 18 10 16 15 14 20 12 25 10 30 8 35 6 40 4 45 2 -
- Suppose widgets have a price elasticity of demand equal to -1,95 and a cross elasticity of demand equal to 2 with dundles. What are the pricing options for a firm that sells widgets? ExplainIn the world of French high cuisine, a three-star rating from the Michelin Red Guide is a widely accepted indicator of gastronomic excellence. French consumers consider Gault Milleau, another restaurant guide, not as authoritative as the Michelin guide because Gault Milleau, unlike Michelin, accepts advertising and its critics accept free meals. Why are guides' ratings important to restaurant owners and chefs? Discuss the effect of a restaurant's rating on the demand for the restaurant. a. A) It provides information to consumers regarding the restaurant's quality, thus, reducing the moral hazard problem. A high rating can increase demand B)It provides information to consumers regarding the restaurant's quality, thus, reducing the adverse selection problem. A high rating can increase demand. b. Why do advertising and free meals taint the credibility of Gault Milleau? Discuss the moral hazard problem of Gault Milleau's ratings. A) The critics may be biased toward restaurants that give…Macmillan Learning You have been appointed head of marketing for Barry's Younique Yachts. Barry, the CEO, is interested in determining whether offering his yachts at a lower price would increase the firm's revenue. He asks you for advice. Using your knowledge of elasticity, you should tell Barry that he should increase his prices. Demand for yachts is perfectly inelastic, so a price increase will cause total revenue to increase. that he should reduce his prices. Yachts are luxury goods and therefore exhibit a high price elasticity of demand. Thus, reducing prices would increase revenue. that he should increase his prices. Demand for yachts is likely to be elastic because they are so much fun to drive. Thus, increasing prices would increase revenue. that he should reduce his prices. Yachts are a necessity and therefore have a low price elasticity of demand. Thus, reducing prices would increase revenue.
- At a price $12 per unit, Gadgets incorporated is willing to supply 24,000 gadgets, while United Gadgets is willing to supply 16,000 gadgets. If the price were to rise to $15 per unit, their respective quantities supplied would rise to 27,000 and 21,000. If these are the only two firms supplying gadgets, what is the elasticity of supply in the market for gadgets?In advertising, a business is not only making consumers aware of the existence of the product and its positive features but is purposely trying to persuade consumers to purchase the product. As a piece of economics which of the following best characterises what advertisers are trying to do? (a) Shift the demand curve to the right and make it more income elastic; (b) Shift the demand curve to the right and make it less income elastic; (c) Shift the demand curve to the right and make it less price elastic; (d) Shift the demand curve to the right and make it more price elastic.Please fill-in the empty cells in the table below. Explain the relationship between the elasticity of demand and the total revenue (TR). What pricing strategy can you recommend? Price Qd Elasticity of demand TR=PxQ 0 20 - - 0 5 18 10 16 15 14 20 12 25 10 30 8 35 6 40 4 45 2 - - 90