What is demand elasticity?

What is demand elasticity?

Refers to how demand for a product changes due to minor changes in the price. High elasticity means larger changes can occur without affecting the demand, whereas low elasticity means demand is very sensitive to changes in price.

Standardized/undifferentiated products are generally more sensitive to changes in price than differentiated products.

What factors influence international pricing?

What factors influence international pricing?

1. Pricing objective

2. Competition

3. Target customer

4. Pricing controls

4. Price escalation

Which out of the four types of countertrade is the most beneficial to the seller?

Which out of the four types of countertrade is the most beneficial to the seller?

The counter-purchase, as it provides the seller with more flexibility than the other types due to the time period, generally 6-12 months, to complete the second contract. During the time that markets are sought for the goods in the second contract, the seller has received full payment for the original sale. Further, the goods to be purchased in the second contract are generally of greater variety than those offered in a compensation deal.

Why is counter trade increasing?

Why is counter trade increasing?

There are a variety of reasons purchasers impose countertrade obligations on the seller.

1. The most important being a shortage of hard currencies. This is the most prevalent.

2. When a country produces a product in large quantities in which there is a low market demand, the country may offer products in counterpurchases as a means of getting rid of excess supply. Generally speaking, goods are offered for countertrade when there is a low or minimal market for the goods.

3. Another reason is because the country does not have an established international market in which to dispose of the goods. There may be a world market for the goods but the country does not have the ability or access to the market and thus may force products in countertrade.