What Effect Should Each of the Following Have Upon the Demand

question 10

Essay

What effect should each of the following have upon the demand for MP3 players? Explain your reasoning in each case.(a) the development of reasonably-priced smart phones that compete with MP3 players
(b) an increase in population and incomes
(c) a substantial increase in the number and quality free downloadable MP3s
(d) consumer expectations of substantial price increases in MP3 players
(e) a decrease in the price of MP3 players

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Definitions:

Contribution Margin Mix

The relative proportion of different products or services, contributing to the total contribution margin, highlighting how combination effects overall profitability.

Break-Even Point

The point at which total costs and total revenue are equal, meaning there is no net loss or gain, and one has 'broken even'.

Unit Contribution Margins

The difference between the selling price per unit and variable cost per unit, indicating the contribution of each unit sold to covering fixed costs.

Fixed Costs

Expenses that do not change with the level of production or sales activities within a certain range or period.