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Anonymous A

on Aug 11, 2021

Global

Which of the following would be helpful in understanding a product's demand curve?

Hello, I have a question;

Which of the following would be helpful in understanding a product's demand curve? (One or more)

a. Benchmark against own costs of production

b. Compare against mark-up percentage for other product models

c. Benchmark against price and quantity of competitors' products

d. Survey customers on the likelihood of purchase at different price points

I would also like to understand more about what does a product's demand curve mean?

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Top answer

Ian

Coach

edited on Aug 11, 2021

Top US BCG / MBB Coach - 5,000 sessions |Tech, Platinion, Big 4 | 9/9 personal interviews passed | 95% candidate success

Hi there,

The answer is c AND d…both are literally the definition of a demand curve!

So, the demand curve is essentially how many units I will sell at a given price.

As prices go up, fewer people will buy (generally). As prices go down, more people will buy.

Elasticity affects how quickly this dropoff occurs.

I highly highly recommend you look this up to get some better definitions/examples on this!

Question: Why does OPEC group together to cut output?

Answer: Demand for oil is highly inelastic. Therefore, a small decrease in quantity will jump up prices a lot more (more than 1 for 1)…so, total revenues/profits end up higher!