Choose any company/organization & have a conversation with a business owner or manager about the pricing of one of the products of their company or organization. It does not matter what kind of company/organization or its location as long as the owner/manager has to make a decision about how to price some good or service. use this company & pricing to answer all questions below for thumbs up. please type answer as written answer are sometimes difficult to understand. thank you

1. Describe the firm under consideration. If you are able to get better information by promising anonymity, do so and give a general description of the company that will not reveal its specific identity.
2. What is the nature of the good or service being sold?
3. What are the determinants of production cost?
4. What is the marginal cost of producing another unit of the good?
5. What price is charged for the product?
6. Use the above information to calculate the price elasticity implied by the optimal pricing formula. That is, given P and MC, find the value of elasticity (e) that makes (P-MC)/P = -1/e.
7. Then ask, “If price rises by 10%, will units sold fall by about x%,” where x% is the percentage change implied by your elasticity calculation. So, if e = -1.5, then the question would be “If price rises by 10%, will units sold fall by about 15%?”
8. If the answer to #7 is “yes”, proceed to question #10. If the answer to #7 is “no”, ask what they think x% is. That is, how much (in percent) will units sold decrease if you increase price by 10%.
9. Find the elasticity implied by the answer to question #8 and calculate the optimal price. What kind of change in price (rise or fall) would increase profits?
10. Next, ask the owner/manager if her/his firm charges different prices to different customers for this product? If not, why not? If so, which customers pay higher prices? Which pay lower prices?
11. In your opinion, does the firm have unexploited opportunities for price discrimination?

Answer rating: 100% (QA)

i I spoke to the owner of a small company that sells natural health supplements The company is based in the United States and the owner told me that they sell their products primarily online The good ... View the full answer