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Topic: |
Business
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Number of pages / Number of words: |
3 / 839 |
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If the market volume were increased by 9%, the demand elasticity would be three (.09 volume/.03 price change) (Weingarten, Stuck, 2001). Any demand elasticity above one is generally accepted as an indicator that lowering prices could be beneficial to the seller.
Elasticity Claims
At the time of this article, it had been asserted by a senior executive from a leading telecom service provider that the industry demand elasticity was in fact at three...
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This statement raised several questions as to the validity of the claim. Every calculation at the time placed the elasticity at one or less, proving that point was the financial trouble experienced by A T & T and WorldCom, both industry leaders. With a demand elasticity of three, simply lowering their prices should have greatly increased revenues and profits, yet neither company did so (Weingarten, Stuck, 2001)...
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