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ECO401 - Economics 1st GDB Starting Date May 15, 2014 Closing Date May 19, 2014

                                                                                                    Total Marks : 30

The Case:


From an economic viewpoint, internet is the opponent of high prices and high profit margins. By greatly expanding the scope of the market, the internet effectively eradicates geographic boundaries, transactional costs and price competition especially for easily transported goods and services. For example, in the pre-internet era, a person looking for a car had to visit the local market or a well-known showroom to look for the best bargain available. With the internet, consumers can now log on to different websites used for internet marketing and get a data on hundreds of good conditioned cars. Successful internet retailers offer bargain prices, a broad assortment of attractive products, and speedy delivery. They also effectively handle profits and basic customer service. The internet is a wonderful communication device that greatly improves access to information about the product quality, prices and performance. . In today's business world, it is also important to understand how internet marketing can affect price elasticity.


Requirement:


Keeping in view the above scenario of internet marketing, discuss the impact of internet marketing on price elasticity of demand of goods and on profit margins of sellers.

 

Important Instruction:

 

Write to the point and precise answer. Avoid irrelevant and extra details.


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Replies to This Discussion

One of the chief results of Internet marketing is to make a large number of consumers aware of a wide variety of pricing options. Internet marketing makes comparison shopping very easy. It has resulted in a large increase in price elasticity for cigarettes, according to a study by the Stanford Institute for Economic Policy Research. Internet marketing can clearly make demand for some products more sensitive to fluctuations in price. A similar study conducted at the University of Minnesota found that the same held true for the price of airline tickets.

COPYPASTE

If your business is in an area that has a significant Internet presence, then expect consumer demand to be highly sensitive to pricing. In this case, it is wisest to set prices relatively low in order to increase demand for your product or service.

Please Discuss here about this GDB.Thanks

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Effects of Internet Marketing on Price Elasticity


Price elasticity, also referred to as price elasticity of demand, is a measure of how much consumer demand for a product changes in response to changes in price. If the quantity that consumers order changes a lot in response to a change in price, then the price elasticity is very high. Knowing how consumer demand is related to pricing is a critical part of any business. In today's business world, it is also important to understand how Internet marketing can affect price elasticity.

Studies

One of the chief results of Internet marketing is to make a large number of consumers aware of a wide variety of pricing options. Internet marketing makes comparison shopping very easy. It has resulted in a large increase in price elasticity for cigarettes, according to a study by the Stanford Institute for Economic Policy Research. Internet marketing can clearly make demand for some products more sensitive to fluctuations in price. A similar study conducted at the University of Minnesota found that the same held true for the price of airline tickets.

In General

Different products have different levels of price elasticity, in general. For instance, luxury items such as vacations tend to have high price elasticity. A large jump in the cost of plane tickets causes more people to vacation close to home, where they won't need to buy them. Large jumps in cigarette prices do not tend to cause large changes in demand from people who consider cigarettes to be a necessity. Even though there are differences in the price elasticity of different kinds of products, Internet marketing can be shown to increase price elasticity overall. Consider two groups with different degrees of price elasticity: airline tickets and cigarettes. A study by Pepperdine University has demonstrated that Internet marketing increases price elasticity in both airline tickets and cigarettes. Based on this, we can reasonably assume that it's likely to be generally true for many products that Internet marketing leads to higher price elasticity.

According to Mr's John Robinson, The elasticity of demand at any price, is proportional change of amount purchased in response to a small change in price, dived by the proportional change in price.

eP = ∆q/q ÷∆p/p

eP =∆q/∆p ÷ q/p

Total outlay method

1-) eP =1

In this situation total expenditures or total revenue remains the same despite the changes in price.

2-) eP >1

In this situation the expenditures or revenues of the firm react more than the changes in prices.

3-) eP <1

In this situation the expenditures or revenues of the firm response less as a result of changes in price.

Dear Tariq Malik,

Please muja btao k ma Psychology ki assignment ki help khan sa lo ma na group b join kya hwa ha but whan sa kuch help ni mil rahi Psy 502 r Psy 404 ki. ishell be very thank full to u for ur guidance.

+ Ahmad + bhai ECO 401

mein bhi ap help kar dein

Price Elasticity of Demand

P€(d)=percentage change in quantity demanded/ percentage change in price

Profit Margin

\mathrm{Net\ profit\ Margin} = {\mathrm{Net\ Profit}\over\mathrm{Revenue}}

where Net Profit = Revenue - Cost

internet marketing k advantages lekh dain , or price elasticity of demand ko thra sa explain kr dain sath apny words main ....GDB finish 

gdb ka ams dna hy discussion krni hy is topic py

discuss the impact of internet marketing on price elasticity of demand of goods and on profit margins of sellers.

Elasticity of demand is a measure used in economics to show the responsiveness of the quantity demanded of an item to a change in its price.

  • Price elasticities are almost always negative; only goods which do not conform to the law of demand, such as a Veblen good and a Giffen good, have a positive PED.

  • In general, the demand for a good is said to be inelastic (or relatively inelastic) when changes in price have a relatively small effect on the quantity of the good demanded.

  • The demand for a good is said to be elastic (or relatively elastic) when changes in price have a relatively large effect on the quantity of a good demanded.

  • A number of factors can thus affect the elasticity of demand for a good.

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