Quantity Demanded

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08/24/22 Paul Farris 1 Quantity Demanded Price Charged * * MWB(uy) MWP(ay) Variable Cost (VC) Two observations on the price-quantity demand schedule Example of a Linear Price-Quantity Demand Function 0 0 The Optimal price is the mid point between the Maximum Willingness to pay and Variable Cost of the Product GM* = -1/e Where, GM*, (gross margin*) indicates the gross margin at the optimal price and e = the elasticity of demand. Since GM*= (P*-VC)/P* =- 1/e, ConstantElasticityofD em and in $ Term s - 100 200 300 400 500 600 Price SalesVolum e Price elasti city Gross Margin -1.5 67% -2 50% -3 33% -4 25%

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Example of a Linear Price-Quantity Demand Function. MWB(uy). Two observations on the price-quantity demand schedule. Quantity Demanded. *. *. MWP(ay). 0. 0. Price Charged. Variable Cost (VC). - PowerPoint PPT Presentation

Transcript of Quantity Demanded

Page 1: Quantity Demanded

04/19/23 Paul Farris 1

QuantityDemanded

Price Charged

**

MWB(uy)

MWP(ay)

Variable Cost (VC)

Two observations on the price-quantity demand schedule

Example of a Linear Price-Quantity Demand Function

0

0

The Optimal price is the mid point between the Maximum Willingness to pay and Variable Cost of the Product

GM* = -1/eWhere, GM*, (gross margin*) indicates the gross margin at the optimal price and e = the

elasticity of demand.Since GM*= (P*-VC)/P* =-1/e,

Constant Elasticity of Demand in $ Terms

-

100

200

300

400

500

600

Price

Sal

es V

olu

me

Price elasticity

Gross Margin

-1.5 67%

-2 50%

-3 33%

-4 25%

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Pricing Principles

• Cost

• Value

• Competition

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Product Life Cycle Clay Christensen

• Features, technologies

• Quality, reliability

• Ease of use, convenience

• Price

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Summary

• Cost, value, competition and sense of strategy over the product life cycle

• One price will rarely do the job– Segmentation– Bundling– Selling through distributors

• Pricing is a process that can be improved and innovated


chapter€¦ · price. For example, if price changes from $12 to $10, ... d 1 Quantity demanded changes proportionately to Unit elastic price change: % ... d 0 Quantity demanded does

chapter€¦ · price. For example, if price changes from $12 to $10, ... d 1 Quantity demanded changes proportionately to Unit elastic price change: % ... d 0 Quantity demanded does

Change In the Quantity Demanded The change in quantity demanded shows a change in the amount of a product purchased when there is CHANGE in price. This.

Change In the Quantity Demanded The change in quantity demanded shows a change in the amount of a product purchased when there is CHANGE in price. This.

Competition and the Market Chapter 7. The function of Price Price brings quantity supplied in line with quantity demanded. As a good becomes relatively.

Competition and the Market Chapter 7. The function of Price Price brings quantity supplied in line with quantity demanded. As a good becomes relatively.

· Web viewUnderstands that the equilibrium market price and quantity occurs where quantity demanded equals quantity supplied 6. Understands how price guides resource allocation and

· Web viewUnderstands that the equilibrium market price and quantity occurs where quantity demanded equals quantity supplied 6. Understands how price guides resource allocation and

Equilibrium Price The magical price where the quantity demanded is equal to the quantity supplied.

Equilibrium Price The magical price where the quantity demanded is equal to the quantity supplied.

Lecture 3 Competitive Markets - Lakehead Universityflash.lakeheadu.ca/~kyu/B5017/B3.pdf · Quantity demanded exceeds quantity supplied: Kam Yu ... productivity of labour. The supply

Lecture 3 Competitive Markets - Lakehead Universityflash.lakeheadu.ca/~kyu/B5017/B3.pdf · Quantity demanded exceeds quantity supplied: Kam Yu ... productivity of labour. The supply

1 Changes In Income A rise in income - with no change in price - leads to a new quantity demanded for each good –Normal good quantity demanded increases.

1 Changes In Income A rise in income - with no change in price - leads to a new quantity demanded for each good –Normal good quantity demanded increases.

Measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants.

Measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants.

Determinants of Demand. Review: Change in Quantity Demanded Quantity Price D1.

Determinants of Demand. Review: Change in Quantity Demanded Quantity Price D1.

By J.A. SACCO. MARKET EQUILIBRIUM Market equilibrium When the quantity demanded equals the quantity supplied—when buyers’ and sellers’ plans are consistent.

By J.A. SACCO. MARKET EQUILIBRIUM Market equilibrium When the quantity demanded equals the quantity supplied—when buyers’ and sellers’ plans are consistent.

Government in the Market. Market Disequilibrium If quantity demand exceeds quantity supplied or quantity supplied exceeds quantity demanded, a disequilibrium.

Government in the Market. Market Disequilibrium If quantity demand exceeds quantity supplied or quantity supplied exceeds quantity demanded, a disequilibrium.

At price P 3 quantity demanded equals quantity supplied-- Increase Demand With Supply Constant, Equilibrium Price and Quantity Both Increase. S D2D2 E1E1.

At price P 3 quantity demanded equals quantity supplied-- Increase Demand With Supply Constant, Equilibrium Price and Quantity Both Increase. S D2D2 E1E1.

CHAPTER 4 Elasticity. The Responsiveness of the Quantity Demanded to Price When price rises, quantity demanded decreases. The question is how much.

CHAPTER 4 Elasticity. The Responsiveness of the Quantity Demanded to Price When price rises, quantity demanded decreases. The question is how much.

Microeconomics – Unit 2 part 2. Price P Quantity Demanded Qd $9 2 83 7 5 6 9 Let’s assume Lindsey would see the quantity demanded at the following prices:

Microeconomics – Unit 2 part 2. Price P Quantity Demanded Qd $9 2 83 7 5 6 9 Let’s assume Lindsey would see the quantity demanded at the following prices:

CHANGE IN DEMAND vs CHANGE IN QUANTITY DEMANDED Krugman Section 2, Module 5, 6.

CHANGE IN DEMAND vs CHANGE IN QUANTITY DEMANDED Krugman Section 2, Module 5, 6.

Econ Alive Chapter 6. Price at which Quantity Demanded and Quantity Supplied are equal In the real world, Demand and Supply work together.

Econ Alive Chapter 6. Price at which Quantity Demanded and Quantity Supplied are equal In the real world, Demand and Supply work together.

12. The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____. A) direct, inverse.

12. The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____. A) direct, inverse.

ECON1001 Tutorial 3. Q1 Your economics professor told you that the quantity demanded of a good is higher when prices are lower, and the quantity demanded.

ECON1001 Tutorial 3. Q1 Your economics professor told you that the quantity demanded of a good is higher when prices are lower, and the quantity demanded.

when quantity demanded = quantity supplied. Market equilibrium: when quantity demanded = quantity supplied.

when quantity demanded = quantity supplied. Market equilibrium: when quantity demanded = quantity supplied.

AP Economics University High 2012-2013. In a competitive market, price will adjust until quantity supplied equals quantity demanded. However, sometimes.

AP Economics University High 2012-2013. In a competitive market, price will adjust until quantity supplied equals quantity demanded. However, sometimes.