Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / 1)Why might customer satisfaction be a more appropriate objective than profitability? 2)Why might a company reduce its product range? 3)The table below presents the annual market for sofas in Akron, Ohio
1)Why might customer satisfaction be a more appropriate objective than profitability?
2)Why might a company reduce its product range?
3)The table below presents the annual market for sofas in Akron, Ohio. Suppose the state government imposes a $200 excise tax on every sofa sold to be paid by customers at the point of sale. Market for Sofas Price Quantity of Sofas Quantity of Sofas Quantity of Sofas Demanded with (dollars) Demanded Supplied Excise Tax $1,240 140 290 90 170 270 120 1,120 200 250 150 1.06 230 230 180 1.000 260 210 210 940 290 190 240 320 170 278 820 350 15e 300 760 380 130 330 700 410 110 360 Instructions: Enter your answers as a whole number. a. Before the excise tax is imposed, what are the equilibrium price and quantity of sofas in Akron? pus 0sofas b. Including the excise tax, what is the new equilibrium price consumers pay for sofas after the tax is imposed? c. After the excise tax is imposed, what is the new equilibrium quantity of sofas? sofas d. What is the total amount of revenue collected by the government from the excise tax on sofas?
1)Customer statisfaction is the basic need towards stability & long term survival in the market which later will lead to maximum or expected profitability as satisfaction helps in the development of trust worthy relationship with customers promoting loyalty too , a larger share of each customers expenditure can be captured.In simple economic terms we look towards a customer as our beneficiary so the first objective for us is to give away the proper amount of service till the end which could provide both the customer & seller a satisfaction that will result into profitability for a good period of time.The service renderor has to face the supply & demand price fall or increase during economic crisis tenure but he cannot loose its quality & quantity of product which carries a customer's demand as thats the thing which is going to help build the balanced combination in the business.
2)With the passage of time & invention of new technology different product have different range which help the customer to buy a variety of product.but because of this range company sometime may suffer loss.following are the points why a company reduce its product range. 1.To maintain the cost of suppliers:- as a company start to produce different variety of a product it incur higher supplier cost for the supply of that product because its sale is uncertain may be customer buy it or may be not. 2.To maintain processing cost:- a company has to reduce its poduct range to control the processing cost.because a new variety of product take more time to ready than a old one. 3.To reduce the ingredient cost:- if a company launch a varieties of product it incur additional ingredient or material cost which reduces its profits. 4.To cope the uncertainity:-if a company trying to sell a new product in their market.there will be uncertainty that customer may like or dislike the product.so the amount they invest in new product will be waste. 5.To maintain administrative expenses:-if a company reduces its product range it helps in maintaining or reducing the extra charges that a company have to incur for the advertising of the new product. Hope this will help you.
3)
Ans:
a)
P = $1060
Q = 230 sofas
Explanation
The market is in equilibrium at the point where quantity demanded is equal to quantity supplied.
Qd = Qs = 230 sofas
at price = $1060
b)
new equilibrium price = $1200
Explanation
Qd(after tax) = Qs = 210 sofas
at price = $1,000
consumers pay = price + tax
= $1,000 + $200
= $1,200
c)
new equilibrium quantity = 210 sofas
Explanation
Qd(after tax) = Qs = 210 sofas
at price = $1,000
consumers pay = price + tax
= $1,000 + $200
= $1,200
d)
Total amount of revenue = $42,000
Explanation
Total amount of revenue = no of sofas sold * excise tax per sofa
= 210 * $200
= $42,000
