Published online ahead of print August 27‚ 2007 OPERATIONS RESEARCH Articles in Advance‚ pp. 1–19 issn 0030-364X eissn 1526-5463 informs ® doi 10.1287/opre.1070.0411 © 2007 INFORMS Pricing and Manufacturing Decisions When Demand Is a Function of Prices in Multiple Periods Ross School of Business‚ University of Michigan‚ Ann Arbor‚ Michigan 48109‚ hsahn@umich.edu Desautels Faculty of Management‚ McGill University‚ Montréal‚ Quebec‚ Canada H3A 1G5‚ mehmet.gumus@mcgill.ca Department
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aftermath of the collapse of mortgage and stock market‚ the investors shifted to alternative investment opportunities. This created a context for intermittent bubbles where prices rise due to artificial demand of investment and then crash because they could not match the fundamentals of demand and supply. Ghosh J. et al. (2011) also argue that high levels of volatility in food commodity market are associated with rapid increase in liquidity starting in mid-2007 but by no means prices behaved in
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actually have to pay. In all three degrees of price discrimination firms are able to make more profit and eliminate any excess capacity they may have. Firms are able to do this by charging higher prices to those consumers with a more price inelastic demand for their product. The firm is reducing the welfare of these consumers by changing them at the maximum price they are willing to pay and as such‚ reducing their consumer surplus. This can be shown in the diagram below.
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in the text‚ select 5 of these factors and discuss weather patient demand for health care is elastic or inelastic? Perceived substituted effect is low on medicine. There are not many options to choose you might go to natural medicine acupuncture or any other type of alternative medicine but still for severe cases you will have to end up at a physician. Since substituted are low price sensitivity low making medicine inelastic demand won’t change in case of a change in price. Unique value effect‚ if
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product is highly differentiated. Setting prices assuming that demand will not be determined by price and therefore the price can be high with large profit margins. It assumes inelastic demad curve‚ which sales will not affected by prices. * Penetration Pricing: Setting prices assuming that demand will increase with lower prices and decrease with higher prices and therefore there are limitations on your profit margin. Elastic demand curve assumption. * Eurodisney saw itself in a monopoly position
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price‚ and if so‚ how will changing its price affect its profits? What we are talking about here is the nature of the demand curve it faces. How elastic is it? If the firm puts up its price‚ will it lose (a) all its sales (a horizontal demand curve)‚ or (b) a large proportion of its sales (a relatively elastic demand curve)‚ or (c) just a small proportion of its sales (a inelastic demand curve)? • The market structure under which a firm operates will determine its behavior. Firms under perfect competition
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maximize the satisfaction of senior managers‚ at the subsequent sacrifice of profitability. • Price discrimination Monopolists as sole suppliers can discriminate between different groups of customers (based on their respective elasticity’s of demand) separated into different geographic or product segments. A monopolist can practice price discrimination in several ways: • First-degree price discrimination. Often referred to as perfect price discrimination‚ this involves the monopolist charging
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other goods or services. No money is involved. This allowed people to get rid of what they don’t need so they can obtain what they do need. 2. What is the principle of supply and demand? The principle of supply and demand is that the price of goods and services will depend on the supply and demand. If there’s a high demand for a certain good but a low supply‚ the price of the goods will rise. 3. What are tariffs? How do they impact the economy? Tariffs are taxes set on our imports and exports. They
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#5. Other things equal‚ what effects would each of the following have on aggregate demand or aggregate supply? In each case use a diagram to show the expected effects on the equilibrium price level and the level of real output. Aggregate demand is a schedule or curve that shows the total quantity of goods and services demanded at different price levels. Aggregate supply is a schedule or curve that shows the total quantity of goods and services produced at different price levels. a. a reduction
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Question 1 0 out of 1 points Suppose a firm is collecting €1250 in total revenues and the total costs of its variable factors of production are €1000 at its current level of output. In the short run‚ one can predict that the firm will Selected Answer: earn a profit. Correct Answer: continue to operate. Question 2 1 out of 1 points Melissa is trying to decide how to divide her time between her jobs as a night-receptionist in the dormitory‚ which pays €9/hr for as many
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