Price Elasticity

Many companies in todays business solid ground face tremendous pressure from its shareholders to maximise profits. Those companies are strained to find ways to maximize revenues from sales and minimize the be of doing business. One way to determine the correct pricing for a product would be to use the concept of elasticity of demand. This paper will look at elasticity and the factors that go into compute it, and describe how using elasticity could help apple Inc. (Apple) maximize its revenue from the iPod. Finally, this paper will describe how a depart in consumer income will affect the overall demand for iPods. bell elasticity is a tool designed to identify the overall assortment in demand or supply of a product compared to the overall movement of price. For the sake of this paper, we will center on the overall flip in demand from consumers. gingersnap is calculated by creating a ratio of the percentage remove in demand of a good compared to the percentage change in price. If the percentage change in demand is greater than the percentage change in price, the product would have a ratio of more than 1, and would therefore be considered elastic.

If the ratio were greater than 1, that product would then be considered inelastic, as the percentage change in demand was less than that of the percentage change in price. For example, if a product were to annex in price by 10%, and the overall demand fell by whole 5%, then the good would be considered inelastic. If a 10% rise in price caused a 20% settle down in demand that same good is elastic (McConnell & Brue, 2004). Since Apple released the first iPod in 2001, the product has served as one of its iconic products (Hormby & Knight, 2005). Facing the ultimate objective of increasing revenue, Apple continually addresses option of changing the price of the current generation iPod. snatch of demand helps Apple evaluate whether or not the iPod would increase or decrease revenue if Apple were to change its price. If the iPod was... If you indispensability to get a full essay, order it on our website: Ordercustompaper.com

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