Module 3
Assignments to complete this week:
Reading: Managerial Economics and Business Strategy
Chapter 3: Quantitative Demand Analysis (14 pages)
Video:
Khan Academy. (2018, November 15). Introduction to price elasticity of demand. [Video]. YouTube. https://www.youtube.com/watch?v=FBWJYH8DZ1g
Post DQ Answer
Post DQ Peer Response(s)
Complete the Team Project: Project Charter
Discussion Question – CLO 1, CLO 2
Verizon Wireless recently ran a pricing trial to estimate the elasticity of demand for its services. The manager selected three states that were representative of its entire service area and increased prices by 5% to customers in those areas. One week later, the number of customers enrolled in Verizon’s cellular plans declined 4% in those states, while enrollments in states where prices were not increased remained flat. The manager used this information to estimate the price elasticity of demand for Verizon and, based on her findings, immediately increased prices in all market areas by 5% in an attempt to boost the company’s 2020 annual revenues. One year later, the manager was perplexed because Verizon’s 2020 annual revenues were 10% lower than those in 2019: the price increase apparently led to a reduction in the company’s revenues.
Did the manager make an error? Explain.
Discussion Question Information: Answer all questions thoroughly, and be sure to provide one (1) direct response to the discussion question prompt and one (1) peer response. When posting peer responses, elevate your peers by asking probing questions that encourage your peers to engage in a more meaningful and deeper manner or by presenting additional ideas from research.
View the Discussion Question Grading Rubric.
