Sales Forecasting and Pricing Policy Quiz

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What are the key focus of managerial economics?

Microeconomics

How does investment in innovation impact short run profit?

Lowers short run profit

What are some examples of macroeconomic effects?

Inflation, unemployment

What does the US unemployment rate reach in recent data?

18 year low of 3.5% Signup and view all the answers

What are the two categories that factors determining demand can be classified into?

Controllable, Uncontrollable Signup and view all the answers

What question does elasticity help answer regarding buyers of a product?

How will buyers of your product respond to price changes? Signup and view all the answers

What is the definition of own price elasticity of demand?

Percentage change in quantity demanded divided by percentage change in price. Signup and view all the answers

How does revenue change with lower prices if demand is price-inelastic?

Revenue decreases with lower prices if demand is price-inelastic. Signup and view all the answers

What does income-elasticity determine?

Income-elasticity determines how demand changes with customers' incomes. Signup and view all the answers

What is the importance of advertising elasticity in decision-making?

Advertising elasticity is important in deciding on advertising budgets. Signup and view all the answers

List three factors that determine price elasticity of a good.

<ol> <li>Whether the good is a luxury or necessity</li> <li>Availability of close substitutes</li> <li>Share of income spent on the good</li> </ol> Signup and view all the answers

What is income elasticity for necessities, luxuries, and inferior goods?

Necessities have zero elasticity, luxuries have zero at low income levels then high, and inferior goods have negative elasticity. Signup and view all the answers

What is the formula for price elasticity of demand?

e= (dQ/dP) * (P/Q) Signup and view all the answers

Explain price discrimination and its impact on revenue.

Price discrimination is charging consumers different prices for the same product. If demand is elastic, revenue is gained by reducing price, but if demand is inelastic, revenue is gained by raising price. Signup and view all the answers

How can firms use advertising when price elasticity of demand is high?

Firms can use advertising and other promotional techniques to reduce elasticity. Signup and view all the answers

What does income elasticity of demand reveal about goods?

Income elasticity shows demand sensitivity to changes in income. Normal goods have positive income elasticity, while inferior goods have negative income elasticity. Signup and view all the answers

What is the range of income elasticity for noncyclical normal goods?

0 < εI < 1 Signup and view all the answers

How does the elasticity of supply differ from the elasticity of demand formula?

Price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. Signup and view all the answers

What is the alternative strategy for a firm if income elasticity is very low?

Improve product quality or move into new product lines with higher income elasticity Signup and view all the answers

What are the two components of buyer power in Porter's Five Forces model?

Price sensitivity of buyers and bargaining power of buyers Signup and view all the answers

What determines the price sensitivity of buyers?

Purchases of product as % of total purchases, Product differences and brand identity, Impact of product on the quality of the buyers’ product or service, Customers’ own profitability, Decision-makers’ incentives Signup and view all the answers

How does the analysis of demand extend away from consumers to industrial buyers?

By considering factors such as product differences, brand identity, impact on the quality of buyers’ products or services, customers’ own profitability, and decision-makers’ incentives Signup and view all the answers

What concept in the text provides a link to marketing?

Price sensitivity of buyers Signup and view all the answers

What is the main goal of the Economics Module in the Leigh Neethling School of Economics?

Understand usefulness of economics in describing managerial behavior. Signup and view all the answers

Why is understanding economics important for managerial decisions?

To improve managerial decisions. Signup and view all the answers

What is the significance of appreciating the vital role of business in society?

To understand the importance of business in society. Signup and view all the answers

What are some key topics covered in the course content of the Economics Module?

Demand Elasticity, Supply, Market structures, Macroeconomics, International Economics, etc. Signup and view all the answers

How is managerial economics defined?

The application of economic analysis to managerial decision-making. Signup and view all the answers

What is the main objective of a production manager according to the text?

To achieve a production target at the lowest possible cost. Signup and view all the answers