Jørgensen and Zaccour (1999) compared perfect Nash pricing and advertising strategies between non-coordination and coordination strategies, where the retailer’s stock of advertising goodwill follows the Nerlove-Arrow model. For both strategies, the authors found that optimal advertising efforts are the same for both members, decrease linearly over time, and are positive as long as the stock of goodwill advertising does not exceed a threshold. In addition, the equilibrium stock of advertising goodwill and the advertising rate converge. However, when comparing quantitatively results between both scenarios, the authors found that: i) the retailer charges a higher price in the non-coordinated case, ii) advertising decreases linearly with stock
Meanwhile, inelastic demand is represented with a much more upright curve as quantity changes little with a large movement in price. Elasticity of supply works similarly. If a change in price results in a big change in the amount supplied, the supply curve appears flatter and is considered elastic. Elasticity in this case would be greater than or equal to one. On the other hand, if a big change in price only results in a minor change in the quantity supplied, the supply curve is steeper and its elasticity would be less than one.
However by using a cost focus strategy, and matching the quality of well known brands but keeping cost low by eliminating advertising and promotional expenses will save K-Mart money. Should Kmart and Sears keep their own identities and have unique competitive strategies, or should they be combined in some way with a new overall corporate competitive strategy? Please defend your answer. The key issues for K-Mart strategies are finding the right cost level for an opportunity to be aggressive, and differentiating the product for consumer in terms of different consumer and different intangible product attributes. K-Mart and Sears should be combined with a new overall corporate competitive strategy using a cost focus.
It also negotiates deals for merchandise directly from manufacturers, eliminating the middleman. Wal-Mart’s new slogan is “save money, live better” (Wal-Mart Stores, n.d., p. 1). According to the company’s website, “saving money is a means of helping our customers live better. By offering the best possible prices on the products our customers need, we can help them afford a little something extra” (Wal-Mart Stores, n.d., p. 1). For each strategy that Wal-Mart promotes in flyer ads or television commercials, they measure the return on investment from these promotional strategies.
Because payoffs of call options is maximum（St－K，0）, which means the payoffs will be lower when strike price is higher, at the meantime, the probability for a call option holder to make a higher return will be lower, as a result, option price will be lower. Conversely, for put options, higher strike price will lead to higher payoffs so option price will be higher. （Ross，2015） The third parameter is Coupon Interest Rate, which is the annual interest paid on a bond. When increases coupon rate from 8% to 10%, option price increased up to 16.430. As he higher coupon rate, the higher bond returns.
According to PPP or Law of on prices, if convert the price of a basket of goods in one currency into another currency, the price should be same. But in the real world, when an identical basket of traded and non-traded goods are converted to a common currency, the price index tend to be higher in richer countries. For instance, one dollar can buy more goods in Mexico than in the US. Because of this problem, a modification model is introduced by Balassa (1964) and Samuelson (1964) which are aims to amend the PPP. The Balassa Samuelson model indicates that due to the lower productivity of traded goods sector in developing countries, the price of non-traded goods is lower.
The same effect also leads to a decrease in the consumption of good 2.on the other hand; there is an increase in the consumption of good 1 due to the income effect. The same effect also leads to decrease in the consumption of good 2. The overall effect makes the consumer of goods 1 and 2 to be less declined towards purchasing the inferior good. Price change for an Inferior Good If a good is said to be an inferior good, then in such a case both the income effect and the substitution effect move in the opposite direction. This means that they do not move in the same direction.
n = -1 Unit (or unitary) elastic. -1 > n > -∞ Relatively elastic. n = -∞ Perfectly elastic. A price drop usually results in an increase in the quantity demanded by consumers The demand for a good is relatively inelastic when the change in quantity demanded is less than change in price. Goods and services for which no substitutes exist are generally inelastic.
• A lower dividend yield is considered better as it reflects a higer capital growth for the company. • However, make sure that the low yield is not because of a steep drop in the price of the share. 4. Dividend payout ratio • This ratio is calculated by dividing the dividend per share by the earnings per share. • Generally this ratio is around the 60% ... ... middle of paper ... ...he past, it is more likely to face similar situations better in future and you can invest in its stocks. • Moat A moat is the economic advantage a company has over others in the market.
Favorable change leads to an increase in demand, unfavourable change lead to a decrease; 3) Number of Buyers. The more buyers lead to an increase in demand. Fewer buyers lead to decrease in demand. 4) Price of Related Goods. (a) price of substitute goods and demand for a certain good are directly related; and (b) price of complementary goods and demand for a c... ... middle of paper ... ...fective influencer.