The Matrix of Transition Probabilities Below Deals with Brand Loyalty

question 46

Essay

The matrix of transition probabilities below deals with brand loyalty to Bark Bits and Canine Chow dog food. ​
a.What are the steady state probabilities?
b.What is the probability that a customer will switch brands on the next purchase after a large number of periods?

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Definitions:

Tax Burden

The measure of taxes paid as a proportion of income or the overall economic impact of taxes on an individual or business.

Own Price Elasticity

A measure of the responsiveness of the quantity demanded of a good to a change in its own price.

Specific Tax

A tax that is levied as a fixed amount per unit of a good or service, rather than as a percentage of the price.

Price Elasticity

Measures the responsiveness of the quantity demanded of a good to a change in its price.