PPT-Chapter 2 Profit’s Sensitivity to Price

Conducting a Profit Sensitivity Analysis to Identify volume Hurdles and the Challenges Inherent in Economic Price Optimization Agenda How do price changes influence the ability to capture customers. This module reviews breakeven and covers the concepts of target profit and volume and price-volume interaction.. Author: Paul Farris. Marketing Metrics Reference: Chapter 3. © 2011 Paul Farris and Management by the Numbers, Inc.. Marginals. for linear functions. Break Even points. Supply and Demand Equilibrium. Applications with Linear Functions. Cost, Revenue, Profit, . Marginals. Cost: C(x) = variable costs + fixed costs. Revenue: R(x) = (price)(# sold). Profit Maximizing Assumptions. Firm: Technical unit that produces goods or services.. Entrepreneur (owner and manager) . Gains the firm’s profits and suffers losses and has the goal of maximizing profit.. 1. Sensitivity Analysis. Basic theory. Understanding optimum solution. Sensitivity analysis. Summer 2013. LP: Sensitivity Analysis. 2. Introduction to Sensitivity Analysis. Sensitivity analysis . means determining effects of changes in parameters on the solution. It is also called What if analysis, Parametric analysis, Post optimality analysis, etc,. It is not restricted to LP problems. Here is an example using Data Table.. . 12. Competition. Competition. What is perfect competition?. How are price and output determined in a competitive industry?. Why do firms enter and leave an industry?. How do changes in demand and technology affect an industry?. for . gmat. cat. arpit. . http://www.freegregmatclass.com/. Manufacturer ( i.e. the producer). Wholesaler (dealer) Retailer (shopkeeper). Customer. Sensitivity Analysis. Sensitivity Analysis. What if there is uncertainly about one or more values in the LP model?. Raw material changes,. Product demand changes, . Stock price. Sensitivity analysis allows a manager to ask certain hypothetical questions about the problem, such as: . through What-if . Scenarios. Intermediate Cost Analysis . and Management. 1. 4.3. We assume cross traffic will stop. What if our assumption is incorrect?. 2. Terminal Learning Objective. Action: . Identify Sensitive Variables through What-if Scenarios. His Mom and Dad were in a jam. . . Monopolistic Competition. 3 characteristics. Many small buyers and sellers. No significant barriers to entry. A differentiated Product. What will graph look like in long run?. Houston 4-H CEO. Presented by Sheryl Nolen, CEA 4-H . WebEx Houston4HCEO3 October 12, 2015 . Houston 4-H CEO. Career & Entrepreneur Options (CEO). . Learn about running a business. Tapping into your talents . Tom Koutsky. February 7, 2013. If home broadband service was offered at a price you considered acceptable?. 53% of . non-adopters report . not being . price sensitive. Price incentive strategies . alone . Chapter 9 – Summary of main points. A competitive firm can earn positive or negative profit in the short run until entry or exit occurs. In the long run, competitive firms are condemned to earn only an average rate of return.. Pure Monopoly. A monopolized market has a single seller.. The monopolist’s demand curve is the (downward sloping) market demand curve.. So the monopolist can alter the market price by adjusting its output level.. What are the four . barriers to entry. .. Why . monopolists. are constrained by demand.. How . monopolists. set price and quantity.. What . social welfare. losses are associated with monopolies.. What the common public policy responses to monopolies are..