Products, Services, & Prices

Toyota Motor Corporation is one of the largest automakers in the world. At its yearly conference in Tokyo on May 8, 2008, the bon ton announced that activities through March 2008 generated a sales externalise of $252.7 billion, a new record for the company. However, the company is demoraliseing expectations for the approach year due to a stronger yen, a slowing Ameri do-nothing economy, and the rising cost of raw materials (Rowley, 2008). If Toyota is to continue increasing its revenue, it mustiness examine its business practice and ready on a course of action to maximize its profit. One method that Toyota can consider is using the worth bouncyity of quest to figure whether to increase or decrease the sale outlay of their automobiles. The reactivity or sensitivity of consumers to a price change is mensural by a products price elasticity of demand (McConnell & Brue, 2004). Market goods can be described as elastic or inelastic goods as change in measurement demanded for that good. If demand is elastic, a decrease in price bequeath increase total revenue. Even though a debase price would generate lower sales revenue per unit, to a greater extent than enough additional units would be sold to offset lower price (McConnell & Brue, 2004).

In a normal market condition, a price increase leads to a decreased demand, and a price decrease leads to increased demand. However, a change in income affecting demand is more complex. Types of goods go away help us determine whether demand for cars is elastic or inelastic. If a good is considered to be a luxury rather than a necessity, the greater is the price elasticity of demand (McConnell & Brue, 2004). Cars can be deemed as requisite due to a need for transportation. Other types of cars can be classified as luxury. A person who needs to be able to get from one place to another will have the need for a car. An old vehicle may suffice. In such a scenario, buying a soft touch new car is more likely to be a luxury rather than a necessity. If car prices go up, spate are... If you want to get a full essay, order it on our website: Ordercustompaper.com

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