Suppose you’re relatively new in business and want to launch your product in the market. You have a great deal of flexibility in how you set your prices, you may want to consider pricing for optimum market penetration. This means that you initially sell your product at a low introductory price P0 (say) to attract new customers, then raise prices once you’ve secured your share in the market. Determining the most appropriate pricing model for your business is tricky and takes considerable research. If it is known that change in price P depends upon the demand D and Supply S of your product, where both D and S are linearly related to price P. (a) Write the differential equation the describes the change in price. (b) Describe the pattern of change of price for different phases. (c) For what values of parameter, you have equilibrium price (Hint: Recall equilibrium solution of differential equations)
Suppose you’re relatively new in business and want to launch your product in the market.
You have a great deal of flexibility in how you set your prices, you may want to consider
pricing for optimum market penetration. This means that you initially sell your product at
a low introductory price P0 (say) to attract new customers, then raise prices once you’ve
secured your share in the market. Determining the most appropriate pricing model for your
business is tricky and takes considerable research.
If it is known that change in price P depends upon the demand D and Supply S of your
product, where both D and S are linearly related to price P.
(a) Write the differential equation the describes the change in price.
(b) Describe the pattern of change of price for different phases.
(c) For what values of parameter, you have
solution of differential equations)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
