Module 2: Pricing Optimization

Question 1

Name the two most commonly used price response functions.

Answer 1

1) Linear
2) Logit

Question 2

What is the Linear Price Response Function?

Answer 2

d(p) = D + mp

Here d(p) is the demand when the company offers price p.

D is the intercept of the function. It is the demand when the price is equal to zero.

m is there he slope of the function.