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Avoid the Hustle

So in the light of this deeper complexity, how do we go about finding the right price
As we know, when prices rise, demand generally falls. Likewise, when prices are lowered, demand increases. This seems to suggest that low prices are the ideal. But when we look deeper we see that... When prices rise, so does Unit Profit. So even though demand falls, we still might make higher Total Profits (i.e. We sell fewer widgets, but the profits on each is higher). On the other hand, when prices are lowered, demand increases. But since we're making less Unit Profit, our Total Profits could be less. So in the light of this deeper complexity, how do we go about finding the right price???

So in the light of this deeper complexity, how do we go about finding the right price

As we know, when prices rise, demand generally falls. Likewise, when prices are lowered, demand increases. This seems to suggest that low prices are the ideal. But when we look deeper we see that… When prices rise, so does Unit Profit. So even though demand falls, we still might make higher Total Profits (i.e. We sell fewer widgets, but the profits on each is higher). On the other hand, when prices are lowered, demand increases. But since we're making less Unit Profit, our Total Profits could be less. So in the light of this deeper complexity, how do we go about finding the right price???