foundations for Orbitz actions. This will include price discrimination‚ price elasticity of demand‚ consumer choice and profit maximisation. Also it will address the degree to which they are likely to remain sustainable in online retail markets while using this strategy. This will mainly deal with market structures and consumer loyalty. Orbitz Worldwide is a leading travel agency which owns a range of consumer brands including Orbitz‚ CheapTickets‚ HotelClub and many more. It allows customers to purchase
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postwar contributions of French economists to theory and public policy with special emphasis on problems of resource allocation’‚ American Economic Review‚ 54‚ 1—64. – Ray‚ R. (1986b) ‘Redistribution through commodity taxes: the non-linear Engel curve case’‚ Public Finance‚ 41‚ 277—284. Introduction • Commodity taxes are imposed upon purchases of goods • Transactions are generally public information • The taxes drive a wedge between producer and consumer prices – This causes a distortion in choices
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Spotlight on the theory Indifference Curve Analysis The aim of indifference curve analysis is to analyse how a rational consumer chooses between two goods. In other words‚ how the change in the wage rate will affect the choice between leisure time and work time. Indifference analysis combines two concepts; indifference curves and budget lines (constraints) The indifference curve An indifference curve is a line that shows all the possible combinations of two goods between which a person is
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higher company payments to the retirement fund. Using the theory of consumer behavior‚ how do you think flexible benefit packages would affect an employee’s preference between higher wages and more benefits? Respond to at least two of your fellow students’ postings. Flexible benefit packages affect an employee’s preference between higher wages and more benefits‚ because flexible benefit yields more satisfaction than higher wage. Consumers prefer to have more of a good rather than less‚ and the
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overall economy Micro economics Price of single prod Changes in price of single product Decisions of indiv cons and firms Market and demand for indiv goods Indivs decision whether to work or not Firms decision to expand/ export/ import Macro economics Consumer price index‚ inflation Total output of goods Combined outcome of decisions of all cons and firms Market and demand for all goods Total supply of labour Total supply‚ exports and imports Positive and Normative economics Positive statement - fact
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ELASTICITY It shows the degree of responsiveness of the change in the one variable due to the change in the quantity of the other variable. Elasticity = Percentage change in the one variable Percentage change in the other variable It is simply a way of quantifying cause of and effect relationship. The concept of elasticity can be used in demand and supply. ELASTICITY OF DEMAND We can study the elasticity of demand under the following categories. Price elasticity
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Permanent Income Hypothesis Introduction The basic idea is that people’s income has a random element to it and also a known element to it and that people try to smooth the random part using saving and borrowing. Hence‚ we need to distinguish between permanent income and transitory income. Example: Suppose that you are working and receive an annual salary of twenty thousand dollar. Suppose that you expect to get that salary every year in the future. Then twenty thousand dollar represents the
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ECM002 Business Economics Instructions: Please answer four out of the following six following questions: Question 1. Suppose Cola- Sol and Miniranda are the only two companies producing a particular type of cola drink in the soft drink industry. Both companies are considering launching a new drink with a light lemon twist. They can launch their products either at a low price or at a high price. The expected net payoffs are the following: If both companies choose a high price strategy‚ Cola-
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Chapter 06 Consumer Behavior QUESTIONS 1. Complete the following table and answer the questions below: LO1 a. At which rate is total utility increasing: a constant rate‚ a decreasing rate‚ or an increasing rate? How do you know? b. “A rational consumer will purchase only 1 unit of the product represented by these data since that amount maximizes marginal utility.” Do you agree? Explain why or why not. c. “It is possible that a rational consumer will not purchase any units of the product
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analyse this reasoning. 6. List some ways in which consumers and firms might respond to a large increase in the price of oil. What effect would this have on the longer-term price of oil? 7. Answer all parts. a) Why do economists theorise rather than attempt to describe reality? b) Do assumptions have to be realistic in order for a theory to work? c) Suppose you wanted to construct a model to explain the number of cars consumers would purchase during a given year. List twenty factors
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