GENERAL GUIDELINESThis is an individual assignment that should not be discussed with fellow students...

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GENERAL GUIDELINESThis is an individual assignment that should not be discussed with fellow students or other individuals.Submissions are made via Canvas and will be screened for originality using TurnItIn.com.The case should be addressed in a well-organized discussion, free of grammatical and spelling errors. Your analysis should focus on the application of economic theory. All economic terms used should be fully defined. Any references to outside sources must be cited following APA guidelines. While there are no formal length guidelines, I anticipate that you can provide a clear, concise discussion in about XXXXXXXXXX,000 words, not including title page and references. Case DescriptionFrom the time Apple launched iTunes in mid-2003 through early 2009, it charged $0.99 for each song on its U.S. site. Despite having sold over nine billion songs by early 2009, Apple was under pressure from many sides to change the price. Music producers wanted Apple to charge more. Should iTunes raise or lower its price? We know that in 2009, Apple changed to a new U.S. pricing scheme: $0.69 for a song from the older catalog, $0.99 for most new songs, and $1.29 for the most popular tracks.Discuss fullytheeconomic analysisthat likely supported this business decision.Be sure to includeclear linkage to economic concepts(for example, elasticity) in your discussionSome questions to consider:Categories of Song:How did managers likely determine which categories of songs should have lower or higher prices?Production Costs:Does Apple’s marginal cost of production change when they sell more songs?Predicted Revenue and Profit:How could managers have predicted if the price changes would raise revenueandprofit? Discuss both revenue and profit – they are not equivalent concepts.NOTE:This case doesNOTrequire you to research Apple. I want you to demonstrateyourknowledge of economic theory as it applies to this case.

Komalavalli · Accepted Answer

Categories of Song:
The managers can determine whether they should charge high or low price for different song categories based on the price elasticity of demand.
Price elasticity of demand indicates the people demand responsiveness to change in price. If there is elastic demand for the category of song, the manager should charge low price and it should charge low price if it is inelastic.
Production cost:
Yes the marginal cost of production changes when it sells more songs.

GENERAL GUIDELINES This is an individual assignment that should not be discussed with fellow students or other individuals. Submissions are made via Canvas and will be screened for originality using...

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