Another analyst states that the firm has some market power and suggests that they could set the
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Another analyst states that the firm has some market power and suggests that they could set the price higher without losing all demand. Assume now that the demand depends solely on the price the business sets. For every $1 increase/ decrease in the price from $7.60, the analyst expects demand to go down/ up by 50,000 units from a base demand level of 100,000 units. The expected change of 50,000 units has a standard deviation of 10,000 units. Inform management about how the distribution of the revenue looks with these changes when sampling the price variable from a normal distribution with a mean equal to $7.60 and a standard deviation of $2.00. You shall make sure that demand can never be negative in the simulation model.
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