Keeping up with the times
‘In September 1993 the owners of The Times newspaper unilaterally lowered the price of The Times by one-third. Initially all the major competing newspapers kept their prices constant and carried on as if nothing had happened. Only later did a price war break out.’
The table compare prices and sales of the four major national newspapers- The Times, the Guardian, the Daily Telegraph, and the Independent. The data suggest that tastes didn’t change significantly, since the sales of all the newspapers held constant at around 2.5 million copies daily.
The other table shows that the cut in the price of The Times shifted the Independent’s demand curve to the left. As you can see from table 1 a 40% price reduction of the price of The Times led to a 17.5% increase in its sales. This indicates a price elasticity of demand for The Times of-0.44 (percentage change in quantity demanded 17.5/-40 percentage change in price). As a result, The Times’ daily......
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Approximate Word Count: 611
Approximate Pages: 3 (260 words per double-spaced page) |