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Select a company with which you are familiar and for which you are able to find data on prices and revenues from sales. You need to gather data for at least 5 periods (days, months, quarters, or years). You might find data from EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system used at the U.S. Securities and Exchange Commission: https://www.sec.gov/edgar/search-and-access
The Price column in your summarizing table should contain different prices the company has charged in the chosen time period, preferably in increasing order. No more than two prices should be the same. Quantity Sold represents the market demand for the company’s product/service, thus the relationship between P and Q obeys the law of demand. This means that as P increases, the Quantity Sold will decrease and vice-versa, all else equal. This opposite relationship needs to be reflected in the corresponding columns for Price and Quantity Sold. At the same time, for any given price, the company must be willing and able to offer the product/service at that price. This means that the Quantity Sold also represents the quantity supplied by the company. In summary, the Quantity Sold represents the equilibrium quantity the company faces for any given Price. Recall that: Revenue from Sales (Sales) = Price * Quantity Sold
After having filled out the summarizing table discuss and conclude the company’s price strategy in the current and/or next period, based on the understanding of the relationship between the price elasticity of demand and revenue.
What is your proposed price strategy for the upcoming period (which could be the coming month, season, or next year, depending on what periods you chose)? Be specific about whether the price your company will charge should increase, decrease, or stay the same, and why. Your answer should be based exclusively on the concept and your calculations of the price elasticity of demand, and its relationship to total revenue from sales.
What other economic or business arguments, other than the price elasticity of demand, may provide additional support for your proposed price strategy?