Price elasicity model calculations?
ok, doing a task and have worked out I think what i need, but I have to be honest this price elasticity thing melts my brain. can i get a steer as to whether i am way of course or not. thanks
The question is as follows - Suppose you are the manager of a restaurant that serves an average of 400 meals per day at an average price per meal of $20. On the basis of a survey, you have determined that reducing the price of an average meal to $18 would increase the quantity demanded to 450 per day. Suppose you have reduced the average price of a meal to $18 and are considering a further reduction to $16. Another survey shows that the quantity demanded of meals will increase from 450 to 500 per day. Compute the price elasticity of demand between these two points.
I am asked to calculate the price elasticity of both ranges, and i have worked that out to be -1.25 for the first drop and 1 for the second.
My confusion comes when the answers appear to be a negative and a positive? Am i doing something wrong?
sorry but this is quite confusing to a newbie economics person.
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Answers (5)
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I'm sure it remains important for businesses to keep up regular communication and find out what's going on in the team so that they can stay on top of things and be ready to intervene if needed. The balance between trust and control plays a key role in effective management. Thanks to the help of https://wow24-7.io/pricing resource specialists, I used the free time for strategic thinking, which allowed me to develop innovative solutions and grow my business. Direct communication See More▼ with the Team Lead and Delivery Manager has become an effective approach to manage the customer support process and take the burden off yourself. I recommend trying cooperation with a proven resource, and I am sure that this will give positive results soon. Good luck!
on August 24, 2023
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The art of negotiation can give you a big advantage and even win you better deals than what was offered in advance. One effective tactic is nibbling negotiation https://softwarepricing.com/blog/combating-the-nibble/ It can be used by both the seller and the client. Very often this approach is applicable in SaaS markets and sometimes it may be less beneficial for the seller. Therefore, one must be able to apply this strategy, but also resist it. This is the highest skill of negotiation.
on December 11, 2022
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Do you think it is worth using such tricks as nibbling in negotiations with clients and partners? I know that even large companies use such tricks in negotiations, but they do not do it very often.
on December 11, 2022
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I would add this quide to competetive pricing https://priceva.com/blog/competitive-pricing-strategy made by Priceva. This would complement your price elasticity thing :)
on September 07, 2022
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My confusion comes when the answers appear to be a negative and a positive? Am i doing something wrong?
No I don't think you are wrong!
No I don't think you are wrong!
on September 07, 2022