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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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!
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