Determine the pricing strategy to increase revenues based on price elasticity of demand
1) In each of the cases listed below determine illustrate what this consumer needs to do (in terms of purchasing X and Y) to maximizes their utility.
Price is in dollars per unit. Marginal utility is measured in 'utils.'
|
Case
|
Price of X
|
Marginal Utility of X
|
Price of Y
|
Marginal Utility of Y
|
|
A
|
10
|
2
|
5
|
3
|
|
B
|
12
|
4
|
4
|
2
|
|
C
|
3
|
1
|
6
|
2
|
|
D
|
4
|
2
|
4
|
2
|
|
E
|
8
|
4
|
4
|
3
|
2) As Vice-President Marketing and Sales of a business venture, you have been asked to deliver a pricing strategy to increase revenues for all product lines. Discuss how you would use information on the elasticity of demand for each of the products in developing the strategy.